Oprah (Harpo Studios)

[0] Did you see the, I think this was a tweet, is it Tom Marillo that has a...

[1] You don't have to go to Harvard.

[2] Yeah.

[3] Actually, I did.

[4] Really good.

[5] So good.

[6] Welcome to Season 6, Episode 8, the season finale of Acquired, the podcast about great technology companies and the stories behind them.

[7] I'm Ben Gilbert.

[8] I'm David Rosenthal.

[9] And we are your hosts.

[10] Today, we are covering an incredible entrepreneur.

[11] Oprah Winfrey and her company, Harpo Studios.

[12] Oprah is a fixture of American life, entering the home of tens of millions of Americans through their television set every day at 4 p .m. for the 25 -year run of her show.

[13] The Oprah Winfrey Show!

[14] So great.

[15] It is.

[16] But it is the unique story of her business decisions, how she created her brand across her show, a magazine, a cable channel, and more.

[17] how she controlled every detail and grew from TV personality to business mogul that we're going to cover today.

[18] She is the first black female billionaire, and perhaps most relevant to the acquired audience, she really invented the idea of what we today call an influencer.

[19] If you watch a YouTuber, TikToker, have ever bought a product that an internet personality recommended, or even more abstractly, you like thinking about how social platforms are transforming the consumer economy you really have Oprah to thank for paving the way.

[20] I don't know if you saw, I was watching the David Dobrick YouTube a little bit ago where he and his crew drove around L .A. I didn't see it.

[21] And tossed out like, you know, gifts to, I was tossing out like PS4s and cell phones and Xboxes and then like tossing out like $10 ,000 checks and stuff.

[22] But it's like, yeah, I guess who did that first.

[23] You get a car.

[24] You get a car.

[25] You get a car.

[26] Oh, we will get into it.

[27] Oh, yeah.

[28] As always, if you love Acquired and you will, want more, you can become an acquired limited partner.

[29] Our most recent episode was the first in a mini -series that we were calling Venture Capital Fundamentals.

[30] We kicked off the six -part series with a deep dive on sourcing, how different firms do it, why it's important, and the different schools of thought around the topic.

[31] So if you want to join, you can get access by clicking the link in the show notes or going to glow .fm slash acquired, and all subscriptions come with a seven -day free trial.

[32] And we have a big announcement.

[33] about the LP program coming later in the show.

[34] So we're going to, we put a little box on everybody's chair who's listening.

[35] Don't shake it.

[36] We're all going to open it at the same time.

[37] We do have an announcement in the middle of the show.

[38] Stay tuned.

[39] The more you learn about Oprah, the more that you learn that as a media personality or a media, I guess that's the right way to phrase it, there's nothing you can do that Oprah hasn't already done.

[40] Literally nothing.

[41] Yeah.

[42] Okay, listeners, now is a great time to thank one.

[43] of our big partners here at Acquired, ServiceNow.

[44] Yes, Service Now is the AI platform for business transformation, helping automate processes, improve service delivery, and increase efficiency.

[45] 85 % of the Fortune 500 runs on them, and they have quickly joined the Microsoft's at the NVIDias as one of the most important enterprise technology vendors in the world.

[46] And, just like them, Service Now has AI baked in everywhere in their platform.

[47] They're also a major partner of both Microsoft and NVIDIA.

[48] I was at Nvidia's GTC earlier this year, and Jensen brought up ServiceNow and their partnership many times throughout the keynote.

[49] So why is ServiceNow so important to both Nvidia and Microsoft companies we've explored deeply in the last year on the show?

[50] Well, AI in the real world is only as good as the bedrock platform it's built into.

[51] So whether you're looking for AI to supercharge developers and IT, empower and streamline customer service, or enable HR to deliver better employee experiences, service now is the platform that can make it possible.

[52] Interestingly, employees can not only get answers to their questions, but they're offered actions that they can take immediately.

[53] For example, smarter self -service for changing 401K contributions directly through AI -powered chat, or developers building apps faster with AI -powered code generation, or service agents that can use AI to notify you of a product that needs replacement before people even chat with you.

[54] With ServiceNow's platform, your business can put AI to work today.

[55] It's pretty incredible that ServiceNow built AI directly into their platform.

[56] So all the integration work to prepare for it that otherwise would have taken you years is already done.

[57] So if you want to learn more about the ServiceNow platform and how it can turbocharge the time to deploy AI for your business, go over to ServiceNow .com slash acquired.

[58] And when you get in touch, just tell them Ben and David sent you.

[59] Thanks, ServiceNow.

[60] All right, David, now over to you to take us into the story of Oprah and the company that she founded that's behind it all, Harpo Studios.

[61] Well, one disclaimer before we get going is anytime you're talking about Oprah, there is way too much to cover in one podcast episode, little on one podcast, little on one show.

[62] I mean, we're talking about a woman who owns her own cable network, you know, gets presidents elected.

[63] So we can't cover it all here.

[64] We're going to be covering her origin story and the business.

[65] behind her.

[66] But two fantastic sources if you want more Oprah and who doesn't want more Oprah that you should go check out.

[67] One is the local Chicago NPR affiliate WBZ did a great podcast a couple years ago that Jen White did called Making Oprah.

[68] It's a three -part series with a few bonus episodes.

[69] Definitely go check that out.

[70] They interview Oprah.

[71] They interview Phil Don at you.

[72] It's great.

[73] And then the other one is a number of years ago Kitty Kelly wrote a unauthorized biography of of Oprah, which is extremely well -researched, controversial in many ways, but also forms a lot of the facts and basis for this.

[74] So definitely go read that if you want a long, deep picture of Oprah Winfrey.

[75] Or should I say Orpa Gail Winfrey, because that is the child that was born on January 29, 1954 in Caziosco, Mississippi.

[76] Yeah, it wasn't as something like people mispronounced her name.

[77] And so she just said, ah, screw it and changed it when she was younger.

[78] Yeah.

[79] So Orpa is a biblical character in the book of Ruth.

[80] That was Oprah's name.

[81] But yeah, people is not a common name.

[82] Mispronounced it, you know, read it incorrectly and just started calling her Oprah or Opie when she was young.

[83] And it stuck.

[84] Wow.

[85] Yeah.

[86] How history could have been different.

[87] Indeed.

[88] Indeed.

[89] What would have happened otherwise?

[90] So everybody knows Oprah, right?

[91] And some people may have a sense of her story that got her to become Oprah that we know her today.

[92] But I think a lot of people don't.

[93] And I didn't before researching this.

[94] And this is just like, you know, this is up there with Andy Grove's story of just such an incredible, incredible triumph over adversity to entrepreneurial success.

[95] So when Oprah was born in 1954 in Mississippi in the Deep South, she was born to a single teenage mother for Nita Lee, who was.

[96] was a housemaid.

[97] Her mother and the family believed that Oprah's father, Orpa's father, was a man named Vernon Winfrey.

[98] And he believed that, too.

[99] It's actually extremely unlikely that biologically he was her father because he was on active military duty nine months before Oprah was born.

[100] But it is definitely true that he wasn't and is a father to her in every other sense of the word.

[101] So after giving birth, Vernita actually left Mississippi.

[102] when Orpah was very, very young.

[103] Orpa, who already then had been started, people were starting to call her Oprah, was raised by her grandmother until she was six years old.

[104] Her grandmother taught her to read and started taking her to church.

[105] And even like at like two, three years old, Oprah was like already, you know, she loved the stage.

[106] People nicknamed her the preacher at church because she would recite Bible verses for the congregation, even as a tiny little child.

[107] That would go on to become a big theme.

[108] in her life a little later.

[109] But then in age six, her mother was living, Renita was living in Milwaukee, Wisconsin at that point in time, had had another daughter, a half sister to Oprah named Patricia, and she sent back home to Mississippi and said, you know, I'm ready to be a mother, send Oprah and I'm going to raise these two girls together.

[110] Patricia, very sadly, would die from a drug overdose at age 43.

[111] So Oprah goes to Milwaukee, lives with her mother for a while.

[112] While she's There, Vernita has another daughter who she puts up for adoption that Oprah wouldn't even know about until, like, only a couple of years ago they were reunited, and a son named Jeffrey, who would later die in the AIDS epidemic.

[113] So just terrible, terrible tragedy befalling this family, and we haven't even gotten started yet.

[114] Oprah shuttled kind of back and forth from Milwaukee to Nashville, where Vernon had moved, and Vernon had settled down there, and he had married a woman named Zelma Myers.

[115] and he was working at Vanderbilt University as a janitor.

[116] They had been trying to have their own children, but we're not able to.

[117] So loved when Oprah would come to visit.

[118] And then at age nine, so between six and nine, she kind of shuffles back and forth.

[119] Between at age nine, though, she goes to live somewhat more permanently in Milwaukee.

[120] And that's where she talks about one night she was watching the Ed Sullivan show on the television in her mother's apartment.

[121] and Diana Ross and the Supremes were on.

[122] And this was like, this was a huge moment.

[123] I mean, you know, the Beatles, of course, been on Ed Sullivan, but like to have a Motown group, an African -American group, a black group, and a group of black women on the Ed Sullivan show, Sunday night, prime time was a huge moment.

[124] So Oprah says, I stopped wanting to be white when I was 10 years old and I saw Diana Ross and the Supremes perform on the Ed Sullivan show.

[125] These are her words.

[126] I was watching television.

[127] vision on the linoleum floor in my mother's apartment.

[128] I'll never forget it.

[129] It was the first time I had seen, ever seen a colored person wearing diamonds that I knew were real.

[130] I wanted to be Diana Ross.

[131] I had to be Diana Ross.

[132] Wow.

[133] Yeah.

[134] It's so interesting how in so many of these stories, you can sort of pinpoint a moment in someone's life where it started to click for them, where like a key piece of who they would become, you know, snapped into place and their motivation, can sort of understand from there.

[135] Yeah.

[136] Hey listeners, quick warning that the next segment contains a high level description of trauma and sexual assault that Oprah experienced.

[137] If you or someone within your shot wants to avoid that, you should skip ahead about seven minutes from now.

[138] Thanks.

[139] Unfortunately, though, so that was, that was, you know, a great, great moment that would become a driving force, you know, and Oprah to this day.

[140] Unfortunately, though, right around that same time, there was a terrible moment that would also set her down a path that fortunately she steered back from but uh she was right around that same time when she was nine years old uh she was raped in Milwaukee by a 19 year old cousin as you can imagine completely shattering this nine year old to be raped and exposed to everything at that age uh she started um spiraling she started drinking she started running away she started having sex regularly.

[141] Also, she's nine.

[142] Like, what does spiraling even mean for it?

[143] Yeah, right.

[144] I mean, it's just, I, I, it's just, I, I, it's just heartbreaking.

[145] Totally, totally heartbreaking.

[146] The family doesn't understand and, uh, it's terrible.

[147] And I think a lot of the family didn't believe her, right?

[148] When she later would tell people about this that, you know, it got swept under the rug.

[149] Yeah.

[150] She's spoken a lot about this and, um, can't even imagine.

[151] When she's fort, teen.

[152] This has been going on for five years.

[153] She's been molested, abused by several members of the family at this point and others.

[154] She runs away from home in Milwaukee and Aretha Franklin was in town in Milwaukee giving a concert and she sees her in a limo and Oprah runs up to her in the limo and starts sweet talking Aretha and says, you know, she's from, I think she says she's from Ohio, makes up some story, needs like bus fare to get home or something, and Aretha gives her $100 bill.

[155] Wow.

[156] And Oprah, of course, then goes and like rents a hotel room for the week.

[157] And supposedly, when Bernita finally finds her, she calls up Vernon and says, I can't, I can't deal with this, with this girl anymore.

[158] You need to take her and take her permanently.

[159] That's the last time she spends in Milwaukee.

[160] And this ends up being, you know, thanks to Aretha.

[161] And Aretha will come back later in the story.

[162] probably just the best thing that ever ever happened to Oprah she goes to live with Vernon and Zelma they instill strict discipline and try and straighten her out they require to go in addition to going school she's a sophomore in high school require her to go to the library and write a book report for them every week in addition to her schoolwork Oprah you know kind of chaves under this and you know it's not happy um and uh she's particularly not happy because Um, she has a, she has a secret, which is that she is pregnant.

[163] And she tries to hide it from her family.

[164] Uh, she goes to East Nashville high, uh, the first class to integrate the school.

[165] It had been an all white school, uh, before that class.

[166] Oh, I didn't realize that.

[167] Yeah.

[168] Crazy.

[169] She tries to hide it from everybody.

[170] She kind of, you know, sulks in the back of the classroom and when, and then a couple of months go by in that winter, uh, Zelma kind of figures out what's going on and, uh, and Oprah's, you know, getting bigger, of course, and, um, can no longer hide it.

[171] So Zelma takes her to the doctor.

[172] forces her to come to a doctor's appointment.

[173] Of course, you know, confirms that she's pregnant.

[174] And Oprah says later, having to go home and tell my father was the hardest thing I ever did.

[175] I wanted to kill myself.

[176] Oh.

[177] I can't imagine.

[178] So through all of this, Oprah ends up going into labor two months early.

[179] She has a son, a baby boy is born in February, 1969.

[180] Oprah had just turned 15.

[181] And because the baby was born so early and then, you know, that time, So it didn't have the care that preemies have today.

[182] The baby ended up dying a month later in the hospital.

[183] So sad.

[184] So sad.

[185] I mean, just looking at this six -year span, we've covered a lot of people on this show who have overcome adversity.

[186] Oprah's story is almost incomparable in the amount of trauma that she went through in those six years.

[187] you know, we've said a couple times the phrase, you and I both said it, I think, I can't even imagine.

[188] It's so, it's so far outside the lived experience that I've had.

[189] And I'd imagine the same for many of our listeners that it requires like a different set of words than I really have for this.

[190] And in doing the research for this episode, it is truly unbelievable and just an unbelievable story of character and willpower and, who Oprah is as a human, that she was able to become who she became after going through all of this terrible, terrible events.

[191] Yeah.

[192] And, you know, the only thing I can, the story that we've told on the show that I think can even come somewhat close is Andy Groves' story, you know, living through the Holocaust.

[193] You know, the just heartbreaking thing about Oprah's story here is like, this still happens, you know?

[194] This happened for so many people and this still happens.

[195] and, um, yeah, David, you touch on something important there.

[196] These are manifestations of systemic problems, of racism, oppression, and also of violence against women.

[197] I mean, it's not just one story about getting a bad luck of the draw here.

[198] Yeah.

[199] So the pregnancy and the baby and the baby dying was a total family secret.

[200] Vernon and Zelma knew, uh, and an Oprah, but nobody else knew.

[201] The family kept it completely, hidden, didn't tell anybody until 1990.

[202] So many, many years later, well after, about seven years into her show.

[203] Uh, yeah.

[204] You know, when it came out and, and Oprah finally talked about it, but this is actually, Vernon, you know, has a quote, uh, this is in the Kitty Kelly book.

[205] He says, uh, that, that when it happened, he, he said to Oprah, quoting here, this is your second chance.

[206] We were prepared, Zelma and I to take this baby and to let you continue your schooling, but God has chosen to take this baby.

[207] And so I think God is giving you a second chance.

[208] And if I were you, I would use it.

[209] Whoa.

[210] Yeah.

[211] That's hardcore.

[212] That is hardcore, heavy stuff.

[213] But that is exactly what Oprah does.

[214] So she goes back to school.

[215] She takes like a week off.

[216] We're now in, you know, late winter of her sophomore year in high school.

[217] And she just completely, completely reinvents herself.

[218] She says, this is a quote from her, I went back to school.

[219] I'm not a soul new.

[220] Nobody.

[221] Otherwise, I never would have had.

[222] this life that I've had.

[223] So she goes back and she's completely different.

[224] She tells everybody that she's going to be a movie star and she's going to be famous.

[225] And so she marches into her English teacher's class and tells her this.

[226] Their English teacher says, okay, great.

[227] I'll encourage you.

[228] And so she gives Oprah introduces her to a book of poetry by James Weldon Johnson called God's Trombones, eight Negro sermons in verse.

[229] Oprah loves this book, these poems.

[230] She starts doing kind of dramatic readings of them in the community and in churches around the city.

[231] And she kind of starts becoming a local celebrity.

[232] Like her readings of these, you know, and again, nobody knows her secrets, right?

[233] But like for a 15 -year -old, like just incredible oration, and she has this deep, you know, Oprah voice already that we all know now.

[234] And so she ends up kind of.

[235] through doing this, she gets the chance to travel to Los Angeles and read for other black church groups in, in L .A. And as she's doing it, she's 15 years old.

[236] She visits the Hollywood Walk of Fame.

[237] And Vernon says when she, when she came back, she told Vernon, Daddy, I got down on my knees there and I ran my hand along all those stars on the street.

[238] And I said to myself, one day, I'm going to put my own star among these stars.

[239] One day, I can buy any star I want.

[240] Yeah, by the whole walk.

[241] I get into the encouragement of her English teacher, I think.

[242] She joins what was then called the National Forensics League at school.

[243] It's now the National Speech and Debate Association.

[244] And she starts giving orations and speeches at, you know, educational contests locally and then around the state.

[245] She starts winning these competitions.

[246] Then she starts competing nationally.

[247] She's traveling all over the country.

[248] Winning competition.

[249] She goes to Philadelphia.

[250] She wins a major competition there.

[251] She ends up I think the next year, maybe, I don't know if it was probably the next year, her junior year.

[252] She gets elected as vice president of the class.

[253] So the first black class officer, remember, the high school just integrated the year before.

[254] And she gets elected most popular in the school.

[255] And then her senior year in 1971, she gets selected as the White House.

[256] This is kind of crazy.

[257] The Richard Nixon White House at the time held this thing called the White House Conference on Children and Youth.

[258] And it took place in Colorado.

[259] And like they selected high schoolers to...

[260] Yeah.

[261] So Oprah on the back of this, she gets back to Nashville.

[262] And she ends up participating in the March of Dimes, you know, March fundraiser.

[263] And she goes to one of the DJs at the local black radio station, get named John Heidelberg, WVOL, and asked him to sponsor.

[264] She's like, you know, hey, I mean, who's got a platform that's going to get, you know, my name out to a lot of people get sponsors here uh you know well the radio station DJ so when he's talking to her he's like you know you've got a really great voice you should do radio yeah you should do radio you should have a podcast and um so he kind of you know tells a bunch of his colleagues like hey this this this this young girl's like you know she's pretty impressive with it so she comes back she does the thing you know comes back to collect the sponsorship after after the March and he and a bunch of other folks at the radio station like, hey, why don't you make a, why don't you make a demo tape?

[265] And so they like have her make a tape.

[266] They cut a tape there while she's there.

[267] How old is she at this point?

[268] Because this is like her first broadcast journalism for A, right?

[269] I think she's 17 at this point.

[270] Okay.

[271] And does she, I mean, I'm asking you as if you're like an Oprah scholar, but like, do you know if she had any inclination of what she wanted to do with her life at this point?

[272] Like was, would she have seen this as like, this is my end?

[273] This my opportunity.

[274] Yeah, totally.

[275] Like she, she wanted to be, but she was like, you know, she was telling everybody at school, there was, um, this might have been as part of the, you know, voting for most popular or whatever, like there was a survey in school, you know, what do you want to be when you grow up?

[276] And, uh, and her answer was famous.

[277] And, you know, she'd seen the stars on the, on the walk of fame and, you know, wanted to, um, so they first give her a job just working part time in the studio.

[278] And then they give her a show.

[279] So she gets a rate, like a real, honest to God radio show as a senior in high school.

[280] She graduates.

[281] She enrolls locally in Nashville at Tennessee State University for college.

[282] It's a historically black university in Nashville.

[283] College is like, of course, she's, she's super smart.

[284] She loves reading as we'll come up later and education.

[285] And, you know, she cares about college and Vernon and Zelma really care about her getting a college degree.

[286] But really, she just wants to focus on the show.

[287] So she doesn't live on campus.

[288] She doesn't live at home.

[289] She's making money from the show.

[290] She moves out.

[291] She gets an apartment in town.

[292] She starts keep up in her, up in her sights, setting them even higher, she decides she wants to get into TV.

[293] And legend has it that, so she must have been either freshman, or probably sophomore in college at this point, legend has it that she interviews Jesse Jackson on the radio show.

[294] Jesse Jackson must have been pretty young at this point too, but already very famous.

[295] And apparently after the interview, Oprah says this later, he tells her, he says, you have the gift.

[296] wow yeah and this is what 70 1973 and she wouldn't have her own she wouldn't start what we know as the Oprah Winfrey show till 83ish so it's a whole decade this is no this this would have been like 70 or 71 wow so yeah we're like way way fresh apparently Jesse Jackson called it first so kind of on the back of that she's she sets her sights on on TV and everybody at the radio station is super supportive they know she's going places so also does cable exist yet like TV at this point is is like they're just the broadcast networks right yeah cable's like starting to become but cable was started I think we talked about this on the ESPN episode it was really for rural areas that couldn't get broadcast reception at this point in time right that they would like relay the broadcast retrans signals over satellite they bounced off the satellites down to the ground tower and then use the cable to distribute just the yeah yeah and i think when did espn start it was a few years later but it was in the 70s so yeah and ted turner starting to think about cable networks but this is still like we're even still pre like in terms of the types of programming like SNL wouldn't start until 75 um so we're you know we're we're in kind of the we're closer to ed sullivan than we are to ESPN.

[297] And also this is super important.

[298] Because of all this, it's the local affiliates of the big national broadcast stations that that's the, that is what people think of when they think of TV.

[299] And specifically, they think of the evening news.

[300] Like the evening TV news, that is the, you know, crown jewel, you know, when you think the top of TV, that's what you think.

[301] And that's what Oprah's thinking.

[302] I don't know how much of this was a calculated plan.

[303] Knowing Oprah a little bit vicariously now, I suspect it was.

[304] In 1972, she enters, she's a college student at TSU.

[305] She enters the Miss Black Nashville beauty pageant.

[306] It was beauty pageant.

[307] It's like, you know, Miss America style stuff, you know, with like talent and, you know, all this, all the stuff.

[308] She wins that.

[309] And then she enters Miss Black Tennessee.

[310] She wins that.

[311] She becomes Miss Black Tennessee.

[312] Whoa.

[313] She goes to the Miss Black America overall thing in L. She places like, like.

[314] Also, how horrible is it that there's Miss Black Tennessee?

[315] Totally.

[316] just like totally I mean yeah I mean how like let me let's pop up another level and generally condemn the beauty pageant industry but then the racist part like yes but good for Oprah for using that as a platform totally used it as a stepping stone she she ends up like like I don't know like 43rd out of 50 in the US in the national competition but it doesn't matter she gets back after that to Nashville and her radio station call at this point so she's kind of proven that she's like, you know, she has some credentials of like looks in addition to voice and, uh, and poise in front of, you know, people.

[317] So her radio station colleagues call up the local CBS affiliate in Nashville, WLAC, and tell them like, like, you got to hire this girl.

[318] Like, you got to she's, she's, you know, she's her, her calling is beyond radio.

[319] Yeah.

[320] And, and, and one playbook theme that I'll pull forward here is like the thing to keep in mind with every step of the way for Oprah is the default pick for whatever she was trying to achieve would not have been her.

[321] It would have been, in all likelihood, a white male.

[322] And so she always had to do a non -traditional thing to give herself a platform and a credential for a reason why she would be the obvious choice over the default choice.

[323] And this is a great example of sort of her creativity and her drive to go and sort of acquire whatever credential or whatever leverage she needed to in order to go and become the person that gets that next spot.

[324] Yep.

[325] Yep.

[326] And her just continue, you know, at every step of her career, she's always thinking about the next step.

[327] And she doesn't in such a way, like, you know, that's not like you could be super, view that as super cunning and conniving.

[328] Right.

[329] It's not conniving.

[330] It's done with poise.

[331] Yeah.

[332] Like, everybody knows it.

[333] Like, she's super upfront.

[334] She's like, I want the star on the Hall of Fame, like, I want to own it, you know?

[335] So WLAC brings her on.

[336] They hire her.

[337] She becomes the first black woman on television in Nashville, I think in all of Tennessee, but definitely in Nashville, all while she's still in college, by the way.

[338] And she comes on board as a reporter for the news.

[339] So not an anchor, but a field reporter.

[340] Turns out what among Oprah's many, many great strengths.

[341] being a news reporter, it turns out is not one of them, which she will freely admit.

[342] So she's not a super great reporter, but people love her.

[343] Like, she's got, she's got the gift when she's on camera.

[344] Certainly nobody looks like her on television, but, you know, nobody sounds like her either.

[345] She just talks like she's, you think of TV news reporters.

[346] You think of like stiff, like, you know, here's right, but she's relatable.

[347] She's authentic.

[348] She's powerful.

[349] Exactly.

[350] She's one of the audience and so she ends up the station sees like people love her she gets promoted to to be an anchor on the evening news you don't do it so good at being a reporter yeah you should come be the anchor just come be the anchor stop this stop this reporting stuff very quickly after that she gets recruited to move to baltimore and take the co -anchor job on the evening news next to jerry turner who was like a total legend at wj z in baltimore the reason she does it she makes the move is a Baltimore is a much bigger media market than Nashville, period, but also WJZ is the number one station.

[351] And this is the number one evening news.

[352] Remember evening news, crown jewel of affiliate TV stations, of TV in general.

[353] Oh, I've seen Anchorman.

[354] I'm familiar.

[355] Yeah, exactly.

[356] If you've seen Anchorman, you know exactly how this works.

[357] So Jerry is Will Ferrell, basically.

[358] So Oprah drops out of TSU and makes the move up to Baltimore.

[359] So she gets there and, probably predictably.

[360] She and Jerry don't get along or see eye to eye on the style.

[361] I mean, he's like, you know, super old school Edward Murrow style like anchor the news and she's Oprah.

[362] And that could work great, but in this case it doesn't work super great.

[363] So a few months in, she gets demoted.

[364] She has a multi -year contract with the station.

[365] So they can't fire her.

[366] But she gets demoted from the co -anchor spot.

[367] But she gets put in the slot as the weekend features reporter.

[368] I don't know much about TV, but that doesn't sound good.

[369] Yeah.

[370] So the assignments, she gets her stuff.

[371] Like, she covers the cockatoo's birthday party at the zoo.

[372] Like, yeah, pretty, pretty rough.

[373] And for somebody as ambitious as Oprah, overcome everything she's overcome.

[374] And then just had this, like, shooting star ascent from, like, high school junior to, you know, co -anchor next to Jerry in a huge media market on the number one station in just like a couple of years.

[375] This is a pretty big blow, but also like, you know, Oprah is not deterred, especially after everything she's been through in life.

[376] Like, this isn't going to stop her.

[377] She like rolls up her sleeves and gets to work and she's like, I'm going to be the best damn, you know, weekend features reported.

[378] Talk a to birthday party reporter there is.

[379] exactly.

[380] And the seeds of the Oprah Winfrey show are sewn right there.

[381] You know, we're joking, but kind of true.

[382] She does that for a couple years and then gets the next big break when the station decides that they're going to start doing a morning talk show after the news.

[383] They're inspired by Phil Donahue, who's been around for many years at this point, but is taking off.

[384] So Phil, it's from Ohio.

[385] He's from Cleveland, actually.

[386] originally is where he started.

[387] Then he had moved to Chicago to a big market doing his talk show in Chicago.

[388] It started getting national syndication and it becomes a major phenomenon, like this whole new category, you know, used to be the daytime talk show.

[389] That was not a thing until Donahue.

[390] It was like, it was so what it used to be before Donahue was you had the morning news.

[391] And then during the day, you had just all, you know, syndicated like Wheel of Fortune, like game shows.

[392] Donahue has this great quote in, um, uh, in the WBZ podcast, uh, with Jen White, uh, I can't remember exactly what he says, but it's like, you know, he's kind of making fun and he's like, you know, it was all like, come on down and click, click, click and you know, whoop -dy -do.

[393] Like that was, yeah, exactly.

[394] That was, uh, that was daytime TV.

[395] So he introduces this, this talk show format and people love it.

[396] Um, and we should say these, these daytime TV syndicated game shows had massive audience.

[397] Like those things were cash cows when they got syndicated.

[398] I think at this time, it was Wheel of Fortune, but not yet jeopardy, if I'm remembering right?

[399] And, like, those were huge syndication deals.

[400] Totally.

[401] And I can't remember when the price is right started, but that kind of stuff.

[402] But I think it was, it wasn't that this stuff was like that compelling.

[403] It was just, like, a lot of people, particularly suburban housewives, watch TV during the day.

[404] They were going to watch whatever was on.

[405] This was what was on.

[406] It wasn't that it was good.

[407] Right.

[408] And so when Don he shows up and they're like oh wow this is like actually speaking to us this is this is good we'll watch this instead and a thing you just said there david i think is really important to drill home for everyone like we live in a pretty male dominated work culture and society now then you know in the 70s like basically dad went to work and mom stayed home and and like daytime tv was for mom to watch whatever mom was going to watch that's like a really important thing to understand about the sort of kindling that was there for this this fire that Oprah would create totally well I think it's super interesting to pull forward a bit is that was true but also there were a lot of jobs there were a lot of places that were workplaces where there were men and women that had TVs on during the day like think about like you know the auto mechanic shop or like um you know anyway you name it a 7 -11 And, like, I remember not too much after this time, you know, when I was growing up and I was a little kid, my parents were both lawyers.

[409] They had their own firm and did Westchester, Pennsylvania.

[410] And during the summers, they'd just bring me along to the firm, stick me in the back office with the TV and be like, you know, entertain yourself.

[411] What would I do?

[412] I watched Oprah all day, like, and Phil.

[413] No way.

[414] Really?

[415] Well, yeah.

[416] I mean, like the TV, you know, now we all have our cell phones and, you know.

[417] That's what, like the mid -90s?

[418] Yeah, this would have been, no, this would have been even earlier, like late 80s, early 90s.

[419] Dude, that's so funny.

[420] I was going to say, aside from our story, but I was going to say, I've never actually watched an episode of Oprah.

[421] Like, I've watched a bunch to prep for this episode, but before this, like, the things I knew about Oprah are like through my grandma because she was a huge, I think my grandma may have watched every episode, or through headlines.

[422] And like through the things you know about Oprah because they were, major pop culture moments.

[423] But, like, I feel like we have way more credibility now that you've actually grew up watching the show.

[424] I grew up watching a lot of Oprah in the summers.

[425] And all these shows, more, you know, like, but I think that was the point was that, like, to again, pull forward to influencers and what would, this would become with YouTube and the internet and TikTok and everything is like, everybody wants to watch something during the day, no matter what you're doing.

[426] Anyway.

[427] So, yeah, so what was Donahue doing?

[428] What was his show?

[429] So that's what, so what Donahue was doing was covering subjects in a talk show format, an interview talk show format that were he and his producers, who are mostly women, thought would be appealing to suburban housewives.

[430] So unlike a game show or something like that, what they really tried to do was thinking like, okay, well, like, what is on these folks' minds?

[431] And what would they like to hear about?

[432] What kind of questions would they ask if they were asking the guests these questions?

[433] And then they would put these folks in the audience.

[434] and then he would go around with the microphone.

[435] He was the first one to do this in the audience and be like, you, you know, audience member, ask the question, what do you think?

[436] And he would have celebrity guests on, right?

[437] Yep, totally.

[438] Well, celebrity guests.

[439] And I think he had the first, I believe this was right.

[440] I think he had the first openly gay person on TV to like talk about being gay.

[441] You know, this is like, we're talking, this happened in the 60s.

[442] So this is the kind of stuff that he was doing, just like human interest type stories in addition to celebrities.

[443] And this genre kind of evolved like out of morning news, right?

[444] Like Donahue, Donahue show was an AM, like a 10 a .m. or 11 a .m. show, right?

[445] Yep.

[446] It was to follow the news.

[447] Got it.

[448] So the idea was, you know, again, we're in 60s America.

[449] Like, dad goes to work, kids go to school.

[450] Mom is now watching TV.

[451] That was the idea for Donahue.

[452] So anyway, it took off in Baltimore.

[453] the station decides hey we should we should also lots of local stations we're saying we need our own morning talk show so they started decide to start a show called people are talking which is an amazing name for a talk show like somebody bring that back totally that should be like that should be like a youtube TikTok channel like people are talking and so they tap Oprah to like they have the perfect host there they tap Oprah to host it amazingly Oprah initially doesn't want to do it because remember like the evening news slot anchoring the evening news that is like that is being that is what being a star means that's the like the definition of the top and she's like what is this I don't know daytime TV you guys already shove me over to the covering zoos like what do you put me on now you're trying to you know push me even lower on the totem pole but they convince her to do it so she does it and like she does the first show and she's like oh I was born to do this this is great and people love it and so within you know months weeks people are talking becomes bigger than Donahue in Baltimore.

[454] So it's only, it's only local.

[455] It's not syndicated yet.

[456] It's just in the Baltimore market, but it's competing same time slot as the Donahue show.

[457] And she's beating him.

[458] He's the king of, king of morning talk.

[459] And so eventually, like, you know, this starts to get notice in the media world.

[460] And eventually people are talking, gets a deal for national syndication and the idea is it's going to go up and compete against Donahue, but it only gets into 17 markets and it kind of flops nationally.

[461] I don't know exactly why.

[462] I don't know if it was maybe like too parochial to Baltimore or just what, but it doesn't work and the syndication deal gets canceled.

[463] So help us understand like what is a syndication deal?

[464] What does that mean?

[465] How do you, how do you get syndicated to other markets?

[466] What companies are involved?

[467] What economics look like?

[468] Yeah.

[469] The biggest syndicator at this point in time is a company called King World.

[470] And I don't know if people are talking with syndicated through King World or another company.

[471] But basically these groups of which King World is the largest are just media rights distribution companies.

[472] So they would go around pick up shows, which all shows at this point in time were being produced locally by local TV stations in any given market around the country, pick up shows syndicate those shows out to other local TV stations around the country.

[473] And that's even like the way it would have worked for like a game show.

[474] Like they would develop the game show at a local station for a local market.

[475] And then a syndicator would come and say, hey, we think this has national appeal.

[476] And they would go get it in all the other markets, even though you're still making it there in Baltimore or Chicago or wherever.

[477] Yep.

[478] And so King World had Wheel of Fortune.

[479] They had Jeopardy, you know, all these shows.

[480] Now what's interesting is, this seems so crazy today.

[481] I don't even realize this growing up.

[482] But, you think of, you know, your local TV station, like, you know, I don't know, in Philadelphia where I was growing up, it was, Channel 3 was the CBS affiliate.

[483] You think of it as like, oh, there's CBS, there's ABC, there's NBC, the big broadcast networks.

[484] Those stations are independent businesses.

[485] They affiliate with the big broadcast networks, but that's really essentially only for primetime TV, you know, kind of 7 p .m. to 10 p .m. the day.

[486] Yeah, they're producing all their own stuff.

[487] They're an independent business.

[488] And so to fill a lot of those hours, they'd work with these syndicators like King World to bring in syndicated shows.

[489] So all this is happening outside of ABC, NBC, CBS, you know, they don't really care what their affiliates are doing during the rest of the non -prime hours.

[490] And all that business is separate.

[491] Yeah.

[492] And the interesting thing about these syndicators, too, that I didn't really realize is since they're getting to participate in the upside of the success.

[493] So at least the way all their deals tend to start, or at least at this time tended to start, was either at a rev share or profit sharing deal.

[494] So they would come to you.

[495] They would say, right now you're only getting to address Baltimore.

[496] Do you want, we think you could play in these 17 markets.

[497] We're going to take some cut.

[498] And I think the cuts very wildly.

[499] So I don't, I can't describe the prototypical deal.

[500] But we're going to take some cut of the ad dollars that come in from whatever those TV networks in Houston and Phoenix and Cleveland are able to sort of generate and then we're going to give the rest to you.

[501] And for a station who owns the rights to a show, you're like, great, it's all upside.

[502] Like anything additional you can get is new marginal revenue, doesn't cost me anything.

[503] Take whatever percentage you feel you need.

[504] And of course, it's not that cordial, but you can see why there's these revenue share or profit share agreements that sort of get worked out to do that.

[505] So being a syndicator, if you get a hit, can be enormously lucrative.

[506] Yeah.

[507] I mean, I think it's, Ben, you may know the detailed economics of these types of arrangements better than me, but I think it's kind of inspired by and very similar to like the book publishing industry, another industry we're going to bring up in a minute where, you know, author writes a book.

[508] That's a fixed cost investment on the part of the author.

[509] In this case, it's, you know, local TV station produces a show, produces the content that's fixed cost investment.

[510] and then you work with a publisher to distribute that around the country or the world, and then you share some portion of the revenue from that.

[511] Yep, and much like the book publishing industry, the syndication sort of evolves into a guaranteed advance or guaranteed up front where they say, look, we think this thing is going to do so well, we're going to give you a big chunk of that up front.

[512] And then when you're, you know, when the number sort of hits the part that we've already given you, then you'll sort of get to participate in this percent of the revenue above that.

[513] And so it can start to look really lucrative for you as a creator because the syndicator will fund the creation of your show on an ongoing basis.

[514] And so you can sort of see already the incentives of a syndicator are to lock in a deal as long as possible at the most favorable economics and the incentives of a creator are either to get as much up front as possible in sort of an advance.

[515] or to make the deal as short as possible so that if you start to get leverage by being really popular, then you can go back to your syndicator and go, you need me more than I need you.

[516] And we'll see how that sort of plays out.

[517] Specifically keep the rights to your content.

[518] So that'll come in one sec. So, okay, all this is going on, even though people are talking fails on national syndication, you know, Oprah's still a big star in Baltimore.

[519] then in 1983 is when the big, big, big, big break comes.

[520] So one of the producers at the station in Baltimore and on people are talking was a woman named Debbie DeMaio.

[521] And Debbie had moved to Chicago a little bit earlier and joined the local ABC affiliate in Chicago, WLS, which was owned by Capital Cities, which will make all a long time acquired listeners and Capital Allocation Fans Smile.

[522] Oh, yeah.

[523] And so Debbie's a producer now.

[524] If you're digging these 70s TV references, go listen to ESPN episode because I think we probably did a much deeper dive on how the industry dynamics of that worked then.

[525] Yep.

[526] Debbie's now working at WLS in Chicago, and they have their own morning talk show, A .M. Chicago.

[527] And one of the co -hosts, they have two co -hosts, one of the co -hosts, leaves.

[528] And Debbie goes to her boss and says, you got to get Oprah out here.

[529] Like Oprah's ready for a bigger stage.

[530] Oprah's going to be the perfect show.

[531] She's going to be perfect for Chicago.

[532] We got to lure her away from Baltimore.

[533] So at the time, the station had a new boss, who is Debbie's boss, a man named Dennis Swanson.

[534] He was there because WLS had been kind of in the dumps who was like, I think it was lowest among all the local affiliates in ratings in Chicago.

[535] And he had been installed by capital cities, which owned the state.

[536] station to fix it.

[537] And of course, Capital City is run by Tom Murphy and Dan Burke.

[538] Master capital allocators, Warren Buffett calls them the greatest operating duo of all time, I think.

[539] Yeah, and famously very decentralized.

[540] So install someone, let them run the TV station.

[541] We'll get out of their way.

[542] Yep.

[543] Okay.

[544] So Dennis is new.

[545] He's there to fix it.

[546] And he says, here's Debbie's pitch.

[547] He says, okay great like let's get her out here let's uh let's let's let's we'll set up we'll do a trial run we'll bring her on the set of a m chicago i'll watch her uh will watch her do a show and and we'll see so she flies out i think it's like on a saturday right like they're like we're just going to pretend that it's a real episode but like it's it's not going anywhere it's we're just going to watch it inside the studio yeah it's a mock episode yep so she flies out she does it and swanson's blown away he's like okay this is not only is Oprah an amazing talent but he's like this is the key.

[548] Now remember, Donahue is, is the OG, you know, the king of morning talk.

[549] He's recording in Chicago at WGN is his low, you know, where he's producing Donahue and then being syndicated nationally.

[550] So he's, he's there across the street.

[551] And he's like, this is how we're going to be Donahue.

[552] We're not going to out Donahue, Donahue.

[553] We're going to zig where he's zagging.

[554] We're going to bring in Oprah.

[555] We're going to bring in a black woman to host this.

[556] Immediately He takes, he takes Oprah upstairs to his office after the mock show and he says, uh, he offers her the job on the spot, $200 ,000 salary, way more than she's making in Baltimore, says, you got to do it.

[557] I want you to start now.

[558] And famously, Oprah says, well, do you have any concerns?

[559] Dennis says, no. She says, you know, I'm black.

[560] And Dennis says, yeah, I can see that.

[561] And then she says, and you know I'm overweight.

[562] And Dennis says, so am I. And so are many Americans.

[563] If we do this, I don't want you to change a thing.

[564] No makeover, no diet, no new hairdo.

[565] like you are America like that's the that's the whole point so she's like oh okay uh so she signs the deal dennis calls up the capital city's brass and they're like you sure about this one and he's like no no trust me this is going to work you know your job is on the line too with these decisions you make yep yep remember he's like he was there specifically to fix the station and uh he says no no no trust me this is going to work and uh of course it does so Oprah makes the move out to Chicago, and they debut the show in January 1984.

[566] It is instant success, like literally instant overnight.

[567] This is AM Chicago is the show.

[568] A .M. Chicago is the show.

[569] The whole station on the back of this new revitalized A .M. Chicago with Oprah hosting it goes from last in the market to first in the market.

[570] Half of Chicago, literally half of the residents of Chicago, start watching A .M. Chicago every day.

[571] So not just women, like half of the city.

[572] And remember, Donahue is recording in the same city.

[573] So she's completely destroying Donahue in his hometown.

[574] Yeah, it was one thing to out Donahue, Donahue, Donahue only in Baltimore.

[575] But, I mean, to be scoped to one local market and be Donahue's market and out Donahue, Donahue.

[576] That's a big deal.

[577] Huge, huge deal.

[578] So a couple things happen on the back of this.

[579] One, Tom and Dan in Capital Cities are like, Dennis, job well done.

[580] We are going to promote you.

[581] It gets promoted up to ABC because Capital Cities had acquired ABC.

[582] at this point, Minow Swallows Whale was the headline that we talked about on the ESPN episode.

[583] We're going to promote you up to ABC to the national broadcasting part of the business.

[584] You're going to run a big chunk of that.

[585] He ends up running ABC Sports, where he inherits as a direct report, Bob Eager.

[586] No way.

[587] Yep.

[588] Yep.

[589] Oh, that's awesome.

[590] Isn't that awesome?

[591] And Bob writes in Ride of a Lifetime that at first when Dennis came.

[592] So Dennis was like this outsider from like, never made the connection.

[593] This is the same Dennis.

[594] Same Dennis.

[595] Uh, so he comes in.

[596] Bob, we've been working in ABC sports under Rue Narlidge.

[597] Dennis comes in and Bob's like super skit.

[598] Bob actually is about to leave.

[599] He gets a job offer to go join a talent agency.

[600] He's going to leave quit Capital Cities and ABC.

[601] And then he meets with Dennis and Dennis is like, no, don't do that.

[602] Like, I'm going to promote you.

[603] And so Dennis then promotes Bob to take over all of ABC entertainment.

[604] He moves out to Hollywood.

[605] Then he becomes, comes CEO of all of Cap Cities and then of course the Disney merger and you know all of that right of man Dennis has the magic touch totally or I suppose like the he's a good picker he's a good identifier of talent that is for sure uh yeah like literally bob was about to quit cap cities and and go have this whole different life until uh until he met Dennis it's also here's another good tech theme like let's let's pivot away from Iger for a second and back to Oprah like what a contrarian bet to bet on Oprah.

[606] It takes probably a lot of guts.

[607] He promoted a super underrepresented minority person to take a huge bet and put, I don't know how much of his career on the line, but some amount of his credibility, maybe all of his credibility on the line.

[608] And what he was doing there, like nobody should applaud him for altruism.

[609] It was like a self -serving investment.

[610] It was a sort of non -consensus bet that he was making and saying, like, by doing something other people aren't doing here that I think is awesome, like, we're all going to go be super successful.

[611] And he was right.

[612] And, and like, especially in this moment that we're in now, like, let that be the message that by doing something non -consensus and by zinging where others are zagging, you can be enormously profitable.

[613] Yeah.

[614] I mean, this was a, this was such a classic acquired, pull cars driving towards the cliff pull the e -brake spin around because like the station was in the dumps one approach to fixing it could have been like okay well we're going to you know do operational efficiency which you know Dennis did too and we're going to like step by step you know go but he was like okay what's something like a big splash we can make here is the king of daytime TV Phil Donahue across the street I'm going to bring in you know this super night we're going to be David against Goliath here and like we're going to throw a different playing field complete on a totally different playing field and like he she and and they dethroned donogue in like a week.

[615] It's crazy.

[616] So the other thing that happens.

[617] So Debbie DeMayo becomes gets promoted to be executive producer of the show.

[618] They expand the show from 30 minutes a .m. Chicago to 60 minutes a full hour.

[619] They rename it to the Oprah Winfrey show.

[620] Boom.

[621] Let's be let's be honest about what this is what the draw is here.

[622] Kind of on the back of all this.

[623] Oprah says, you know what?

[624] I, I need a new agent.

[625] I need like a real, a real agent here.

[626] I forget who her agent was before.

[627] Here's the story here.

[628] And this is from a great Forbes article.

[629] So WLS had been paying Oprah 230 a year.

[630] So she got 230 that first year and then it was going to go up by $30 ,000 each year in her four year contract.

[631] And this is from the Forbes story.

[632] As she tells it, she was pleased at first, but then began having second thoughts.

[633] Three separate ABC people stopped me to tell me what a great guy my agent was.

[634] Winfrey recalls, uh, and that didn't make sense to me. Why were people going out of their way to praise the fellow?

[635] Winfrey's natural skepticism was aroused.

[636] She sacked the agent.

[637] She replaced him with a Chicago lawyer named Jeffrey Jacobs.

[638] I'd heard Jeff is a piranha.

[639] She says of her choice.

[640] I like that.

[641] Piranha is good.

[642] Oh boy.

[643] I didn't find that.

[644] That is amazing.

[645] It's a great observation.

[646] Like if people who you were just negotiating against are, praising your agent.

[647] Like, you got had.

[648] Yeah, you need a new agent.

[649] Oh, man. So great.

[650] Well, Jeff, um, uh, Jeff and Oprah would be business partners for about 20 years.

[651] He both negotiates a much, much, much, much better deal for her and brings her into national syndication and everything.

[652] But two things happen in the, in the next year or so that completely changed.

[653] And where are we?

[654] This is 1985.

[655] This is 1984.

[656] Here, 1984.

[657] And that completely changed Oprah's mindset about what her goals are.

[658] So Jeff, when he comes on board, he says, like, look, I'm, I'm going to get you a much better deal with, you know, a bunch of better salary with, with WLS and all that.

[659] And, like, you know, great.

[660] We'll do, we'll do good.

[661] But.

[662] And he, and he does.

[663] It was, like, a hundred times more.

[664] Like, he was getting her first year salary in the, like, 30 million category.

[665] That was once, that was once national syndication started.

[666] Okay.

[667] Sorry.

[668] So I think, I don't know exactly what it was with um uh when she was just when it was just a am chicago but certainly more so he convinces her like you got to think about your career not just like you don't want to just be talent like i can negotiate deals for you as talent you know all you want but that's not interesting what matters is not how much you make it's how much you keep don't be so is this is a quote from him don't be talent for hire own yourself don't take a salary take a piece of the action so that's you know bumping around in Oprah's mind.

[669] Then the other big thing that happens in this time is Alice Walker's novel, The Color Purple, is being made into a huge film event with Steven Spielberg as the director.

[670] And he's going through casting.

[671] And Quincy Jones has signed onto the project as a producer and is doing the music.

[672] And Quincy tells Stephen, hey, you might want to look into this.

[673] this rising star, this rising star TV personality in Chicago, who I think would be perfect to play Sophia in the movie.

[674] And so Spielberg meets Oprah.

[675] And of course, rest is history there.

[676] It's natural.

[677] So Oprah plays Sophia in the colored purple, nominated for an Academy Award for Best Supporting Actress.

[678] But the thing that happens around all this is Quincy takes Oprah under his wing and introduces her, brings her out to Hollywood, introduces her to all the real.

[679] power brokers in Hollywood and she realizes through this through his advice and seeing all this that like the way you get really powerful isn't to be a movie star it's to own the production uh it's to be an owner and that's the same thing that Jacobs had been effectively telling her like so don't you know the new star is like yeah yeah okay I'm going to get my star on Hollywood boulevard but literally I'm going to own the boulevard like that's how you make the real money and get the real power and this permeates her thinking for the rest of her life.

[680] Like this, now we can sort of see everything set in motion where everything for Oprah becomes about control, only doing things what she wants, doing things on her terms, doing things that feel authentic to her, never, I mean, we start to wait into a different category here of her obsession and not violating her relationship and her bond with the audience.

[681] But it's all sort of tied into this same thing where now the important thing to her is that she's in the driver's seat, not that she can go make that next, you know, tranche of guaranteed money.

[682] You it's really about ownership.

[683] And it actually reminds me of another episode we did, David, with Recode when we had Kara Swisher on.

[684] You know, Kara talked about how her deal with the Wall Street Journal was, hey, look, we're going to do all things digital, Walt and I, and he's an employee, and that's all good.

[685] But I'm coming on contract.

[686] Walt and I own all things digital.

[687] You can contract with us for us to have that be a part of your publication for a period of time.

[688] But that's a thing that I own.

[689] I don't work for you.

[690] It's a, I think, an interesting parallel because it allowed her then to go and do recode and sort of take the the band with her and um and have that control you know this is this is the path this is the way you become an entrepreneur in the in a media world uh and it certainly carries much more risk than like a guaranteed salary payment from whatever big media company but um you know well as we'll see with Oprah I think she's very glad she took this path and and not to mention you need demonstrated success in order to pull this off in your negotiation because you need the leverage to be able to say like it's look it's frankly it's worth it for your business to have me and this is the way in which you get to have me as a part of your publication yeah so while all this is happening king world who you know remember uh people are talking back in baltimore failed on national syndication well you know they're they're not blind to what's happening in chicago now so they come to wLS and to opra and they say hey we're going to take this we're going to take the Oprah Winfrey show national syndicated in a big way not 17 markets 138 markets and did she only do the Oprah winfrey show for one season in Chicago before king world was like and time to go national the first national show was September 1986 so I think it was two years two seasons and am i don't know if it was a m chicago it was probably maybe one season a am chicago then the Oprah winfrey show just in chicago and then and then national um so she actually leaves filming for a week from the Color Purple tells Spielberg, hey, I got to go negotiate my national syndication deal.

[691] And he's like, oh, okay, you know.

[692] And so then it all hits.

[693] Like, Color Purple comes out at Christmas, 1985.

[694] It's huge.

[695] Gets 11 Academy Award nominations.

[696] Oprah's going on all the, she's going on the Tonight Show.

[697] She's getting magazine covers.

[698] She's promoting the film.

[699] But she's also promoting her show, which is about to become a national show, and she starts to realize, like, hey, this is a virtuous cycle.

[700] So on September 8th, 1986, the first national show is broadcast.

[701] Or actually, well, before that, I came remember it was before or after.

[702] She does an interview with Bill Zemi, which was intended to be for Vanity Fair as part of this publicity run.

[703] And Tina Brown, who was then the editor of vanity fair in what would start a feud between her and Oprah that I think last to this day killed it.

[704] The interview ended up appearing in spy magazine instead.

[705] And in this interview, she said to Bill, she said, I intend to be the richest black woman in America.

[706] I intend to be a mogul.

[707] So like she's, the mindset is as has taken.

[708] Oh, and I use the word mogul in the intro.

[709] I was like, oh, is it fair to call, you know, would she like that?

[710] I didn't realize she actually used the word.

[711] That's her word.

[712] So she's pressing the advantage.

[713] September 8th, 1986, first national show, first national Oprah Winfrey show airs in 138 markets.

[714] And on the WBEZ podcast, I think it's Debbie DeMeo.

[715] It tells the story of they tried to get Don Johnson from Miami Vice as the cast.

[716] But couldn't get him.

[717] But couldn't get him.

[718] It was so amazing.

[719] If only they had.

[720] Yeah, this is on that great podcast that David mentioned at the top of the show.

[721] There's a great discussion of sort of the culture of the Oprah Winfrey show at this point.

[722] Like, it's effective.

[723] for scrappy women in a room coming up with stories, making phone calls, hustling, and like doing just heroic effort to put together an hour of TV every day.

[724] You know, you can imagine what the Oprah Winfrey show turned into hundreds and hundreds of people and producers and just, you know, massive staff to be able to pull off these these gambits that they did.

[725] And at this point, it was, you know, it was a startup.

[726] It was incredibly scrappy.

[727] And to be able to, on the one hand, you're like they're in 1838 markets how can they possibly not get don johnson to come on the show i mean they're just hustlers and they they only have the track record of being a local show before this yeah well and so here's this actually is the other piece to the magic that i think then you know Oprah had the gift right and that got her to this point and she now has the aim for the mogul mindset that's the second piece i think the third piece of the magic that makes Oprah Oprah and leads to all of this is she didn't get Don Johnson as the guest.

[728] Instead, her guest on that first show was an author named Margaret Kent, who'd written a book called How to Marry the Man of Your Choice.

[729] And I'm going to read in a sec the verbatim Oprah's opening, cold opening to the first national show.

[730] But keep in mind, as I'm saying this, like, what Oprah is and like who she is here and how she's coming across.

[731] So this is the opening of the show.

[732] I'm Oprah Winfrey.

[733] And welcome to to the first national Oprah Winfrey show and, you know, screams it.

[734] It's like, you know, the classic Oprah.

[735] And she says, there has been, this is the next line.

[736] There's been so much hoopla about this premiere show that it's enough to give a girl hives.

[737] I mean, I've got them right now under my armpits.

[738] One thing I've learned is that no matter how far down you go, and I tell you, I've been down on my knees with the best of you.

[739] No matter how low you feel, this show always allows people hopefully to understand the power they have to change their own lives.

[740] Now, I don't have a lot of problems in my life.

[741] I have to tell you, things are going pretty good for me right now.

[742] But two things have bugged me for years.

[743] The first, my thighs.

[744] The second, my love life.

[745] And then she introduces Margaret.

[746] And like, okay, so just like think about that.

[747] Like the WBZ podcast talks about this.

[748] The target audience is Suzy.

[749] So they identify Susie as like this mythical.

[750] Also, is this the first persona?

[751] Like startups are obsessed with like persona persona development now.

[752] Like they actually named a false audience.

[753] member Susie and like had that as a persona that they would like check against it's like it's like amazon where like the empty seat in the room for the customer it's like the empty seat in the producer's room for Susie like what does Susie you want to know Susie is a suburban mom and so they're always asking themselves like what is who is Susie who are Susie's friends what does Susie relate to what is Susie what are the questions Susie wants to ask and like compare that opening from Oprah to to Donahue to the evening news to anything that's to pay you know the wheel fortune anything that's on TV right now.

[754] Susie's their friend.

[755] It's just so unbelievably authentic.

[756] It's so different than what you're hearing on TV that's wildly produced in any other daytime slot at this point, especially any prime time slot, nobody's talking about hives under their arms or their thighs or like this is like the very first time that the vast majority of viewers are seeing Oprah and they're having this really intimate relationship with her.

[757] Yeah.

[758] So two years later in 1988, the.

[759] highest rated, most watched Oprah show episode in the history of the Oprah Winfrey show happened in 1988.

[760] It was not Tom Cruise jumping on the couch.

[761] It was not you've got a car.

[762] It was an episode called Diet Dreams where Oprah had lost 67 pounds on a diet.

[763] She did it with a product called OptaFast.

[764] She talked about it on the show.

[765] Mostly the fasting.

[766] And when she occasionally did eat, it was opta fast.

[767] Yeah, exactly.

[768] super not healthy we'll talk about all that in the sec but it was crazy like literally 44 million people watch this show uh and then the like the the big um you know over the top moment in the show was uh halfway through she brings out a wagon with 67 pounds of animal fat on it to say like this is i was carrying this around like you know it's i mean it's laughable and very problematic in a lot of ways thinking about it now but think back like this is this she was a friend she was like celebrate like I just went on this diet I lost all this weight like that right here I am in my size 10 jeans I feel like feeling so good and I want to celebrate with my friends yeah and uh 44 million people watched it so crazy so so crazy so she starts you know they they start getting letters from people from all and by the way that's a live number like yeah like let's not there was no dvr there was no YouTube so like 44 million people tuned in during that hour to that concurrently it's like nowadays like you know probably the tom cruise jumping on the couch clip has over 44 million views i would guess on youtube these days but like that's over 15 years this was 44 million people think about what is what does america have population wise at that point maybe like 320 million people no less than 300 at that point yeah so what is that like uh one probably fifth or sixth of america the u .s tuned to in to watch that episode simultaneously.

[769] Unbelievable.

[770] And like this isn't the Super Bowl.

[771] This is a daytime talk show about a woman who lost weight.

[772] Like, but and by 1988 it wasn't just a woman who lost weight.

[773] It was our Oprah.

[774] It was our person and this this, you know, personal quest that she's been on that she's sharing with us.

[775] Yeah.

[776] And I think that's the thing.

[777] like obviously there's a lot that's problematic and like terrible and like gawkish about that.

[778] It's super complicated, but it's real.

[779] Like that's the thing.

[780] It's real.

[781] Right.

[782] And that's who Oprah is.

[783] Well, let's touch on that now because I think Oprah has some quotes looking back on this that are worth mentioning.

[784] And the top one is I actually thought at that time that being thin made me better.

[785] And she talks about that she really regrets that.

[786] She calls it a mistake.

[787] She calls it hard to watch.

[788] and she says, you can see that my ego is on flamboyant display.

[789] I've had to pay the price for that moment over and over, and I literally handed the world on a fat wagon platter the story, this, you know, I'm editorializing this really buzzy story of, is she fat, is she thin?

[790] And of course, like, you know, she's a person.

[791] So she's going to, I don't know if struggle with this is the right word, but fluctuate or, you know, she gains weight, she loses weight.

[792] But the fact that she introduced it in such a big public way, it's that story that people want to write about in the tabloids over and over and over again.

[793] Every time her weight changes, she gave them, as she says, on a platter.

[794] And it's a tough thing to tie sort of your self -worth in your physical appearance like that.

[795] And I think, you know, that this is young Oprah sort of flexing a little bit.

[796] Like, look what I can do.

[797] Look how awesome I am.

[798] And all power to her for doing something that is incredible.

[799] incredibly difficult, but like I think the sort of older, wiser, Oprah later looks back and is just clearly so bummed that, that she opened up in that particular way.

[800] Yeah, 100%.

[801] Let's also be honest, too.

[802] I mean, Oprah, as I think we hopefully described here, is like an exceedingly once -in -a -generation sharp media business woman.

[803] Yeah.

[804] And she certainly knew that by doing this, she was going to get these ratings.

[805] was going to get, you know, by handing the media this story, while certainly painful and all that, like she just guaranteed the next 20 years of headlines about, about Oprah's weight.

[806] You know, again, super terrible and problematic in lots of ways, but Oprah's in the headlines.

[807] Oprah knows what we'll play.

[808] Yeah.

[809] So on the back of that, well, actually it was a little before in 1987, I believe, was the last year of the original contract with King World.

[810] I think it was originally a two -year contract, or maybe it was a three -year and it went into 88, but they negotiated in 87.

[811] She earns $31 million in royalties and salary from the King World contract in 1987.

[812] And that's when she and Jacobs decide, all right, it's time to put the mogul plan into action.

[813] Yeah, because I mean, think about when she was just employed by the station, she was making 200K, then she got, I don't know how much more, but hundreds of thousands of dollars more with a better agent when it was still just the station.

[814] The syndication deal, obviously, that's when you get those one, maybe even two, order to magnitude, jump into this 31 million that year from being in a hundred and however many markets.

[815] So what next?

[816] Yeah.

[817] So what next is, all right, it's time to own the production.

[818] It's time to start a company.

[819] It's time to build a studio.

[820] So they buy the show from WLS.

[821] They buy the Oprah Winfrey show or at least the rights to it.

[822] they negotiate directly with Kingworld.

[823] They invest $16 million of Oprah's own money to build a state of the art production studio in Chicago.

[824] And they're going to produce and they're going to make not only the Oprah Winfrey show, but a lot more media content too.

[825] And they're going to sell it.

[826] $16 million of her own money.

[827] And this isn't the Oprah we know today that has over $2 .5 billion.

[828] This is Oprah that for the very first time last year.

[829] made 30 million but she just knows the trajectory that she's on so she's like you know what let's let's let's put it all back in like let's let's let's buy this thing let's own this thing let's build this thing so this is when they found harpo media so harpo of course is Oprah both Oprah backwards and the uh husband of Sophia's character in in the color purple and so they found harpo media and Oprah owns 80 % of it Jacobs owns 10 % and King World gets an equity stake of 10 % as well as part of this negotiation.

[830] And in doing so, Oprah becomes the first black woman and only the third woman ever to own a production studio.

[831] So like, again, remember, this is the power broker, you know, club of, of the media industry.

[832] So the first two before her, the first two women before her were Mary Pickford and Lucille Ball.

[833] But both of them, of course, owned their studios with their husbands, you know, Lucy and Ricky.

[834] Oprah is the first woman, the solely independently doing this, first black woman period there's no board Oprah controls everything and again they start pumping out other content so the first other project besides the Oprah Winfrey show it's called the women of Brewster place and it's a made for TV movie they know their audience right and so uh kind of just like the you know dennison um you know back of the day the original like having an inkling that this is going to work they have an inkling that a made for TV movie targeted at women is going to work they pitch it to the networks, the networks don't want it.

[835] They want to air this in prime time on the big broadcast networks.

[836] The networks don't want it.

[837] Oprah basically forces ABC, because she has this relationship with ABC and Cap Cities.

[838] I think Bob Heger might have been running ABC entertainment at this point.

[839] So basically forces Bob to, if he was, to take it.

[840] They run it kind of like, all right, we're doing this to appease Oprah.

[841] It becomes the second highest rated TV movie ever.

[842] So it turns out made for TV movie.

[843] I don't know how many people watch the Hallmark channel like it's a good idea or the or own Oprah or Lifetime or like yeah this is a good idea and this is this is the you know of the things we're going to keep coming back to for for Oprah she's got an eye for what's going to work like she knows what will play she knows her audience she knows America as an audience and we're going to keep touching on control we're going to keep touching on her drive to be big but there's this She obviously has this gift of how to speak to people, but she has a real gift for just knowing what will land and how big it will be.

[844] Yeah.

[845] So, okay, so this is the first one.

[846] So what does she do then to build on that?

[847] What does she know it's going to resonate?

[848] So Harpo trademarks, the slogan, live your best life.

[849] They start selling like notebooks, candles, scented candles with Live Your Best Life.

[850] And, you know, sold by Harpo.

[851] Like, they're getting, you know, it's like the Disney flywheel here, like all within Harpo.

[852] This is great.

[853] uh she writes an autobiography and by all account she actually wrote this autobiography and she had a deal with uh canop the publishing house to publish it and then like Oprah's such a genius she decides at the last minute she can't publish it's going to be too painful to my family and so like what that just generates more media for her than like if she had actually published it is like it was the most anticipated book of like the century and then she didn't publish it which just made the myth even stronger.

[854] And so then as a consolation prize, she says to Knaf, okay, well, like, I didn't do this, but I'll do a cookbook with you.

[855] And so she, they publish a book called In the Kitchen with Rosie.

[856] Rosie is her personal chef.

[857] And I'm pretty sure it becomes the fastest and biggest selling cookbook of all time.

[858] Amazing.

[859] And it's especially amazing because Oprah's not even like, her brand around that point isn't even like, I know food.

[860] Like there's no, like, it's, it just happens to be that you know there is the whole diet thing and like you know she's had I think she has the tie in with Weight Watchers at this point right right right but the whole like Rachel Ray relationship hadn't begun yet right that had that hadn't begun yet um so then I think it was one of our producers Alice McGee comes up with the idea in 1996 few years later of well okay so this cookbook thing works and she's always had authors on the show and um you know she recommends their books it leads to like a lot of sales And people used to joke that where Oprah held the book was an indication of what the sales were going to be.

[861] If it was in her lap, it was a dud.

[862] If it was like at her waist, it was like, okay.

[863] If she held it up by her face, that's like, what if she holds it up sort of like a Bible?

[864] Yeah, exactly.

[865] Oh, God.

[866] Let's not go there.

[867] You know, then it was going to be the best song.

[868] You had to.

[869] They had the idea on the show.

[870] Well, what if we launch a book club?

[871] So in September, 1996, they launched Oprah's Book Club with Tony, Morrison's Song of Solomon is the first book.

[872] And the idea is they're going to announce a book, give the audience a month to read it, and then they do an episode with the author.

[873] So that year, they are directly responsible.

[874] And they do special Oprah Book Club editions of the book for $130 million in book sales in literary fiction in 1996, which is many more times sales than the entire genre category had had like in the years before.

[875] just like such a brilliant business idea.

[876] So pause.

[877] Announcement for the LP program.

[878] This is our big reveal.

[879] We're going to launch the Acquired Book Club.

[880] Woo.

[881] So it's going to be part of the LP program.

[882] The first book is going to be Hamilton Helmer's Seven Powers.

[883] Of course, we already have the episode with the author done.

[884] It's like doing this episode where you just realized why it's crazy that we haven't done this for Acquired.

[885] In fact, we already have a book club channel that we just haven't sort of like used in the Slack for an organized way, but you could run a way worse playbook than just copying Oprah over and over and over again in later decades in different modalities.

[886] Well, we'll talk about that in playbook, but yeah, Acquired Book Club.

[887] It's happening.

[888] So here is how it's going to work.

[889] Ben and I are going to choose a book.

[890] Time interval TBD could be every month, could be every six weeks.

[891] We're going to work that out as we go along.

[892] And then depending on the availability of the author, we are going to do either one, or both of an LP episode with the author discussing the book and a LP Zoom discussion with all of you LPs, potentially with the author, if she or he is willing to join us.

[893] We are also going to give all LPs access to Ben and my notes on the book.

[894] Our notes on seven powers are already ready to go as soon as we figure out the right vehicle to get that out to everyone.

[895] Some will be prettier than others.

[896] Exactly.

[897] Exactly.

[898] And then Ben mentioned the book club channel in Slack that has been sitting there for a while.

[899] We're going to repurpose that for use of ongoing discussion of our book club books.

[900] Yes, we are very excited to dive in.

[901] And we are going to borrow from Oprah in more ways than one.

[902] So at the beginning of this episode, David mentioned that you have a box underneath your seat.

[903] Pick that up and gaze inside.

[904] If you have been considering becoming an LP but haven't yet, well, inside that box, should you sign up is a copy of seven powers by Hamilton Helmer with a little note from David and I and just want to send that out to new LPs as a thank you and welcome to the book club and that will be going out to our next 100 LP subscribers.

[905] We also know that lots of you have been LPs for a long time and so we are also going to go back through and pick 100 of our existing LPs to send copies of the book to as a thank you.

[906] So keep an eye out for an email if you're an existing LP or a new LP joining.

[907] And if you live in the U .S., we'll be sending you an actual copy, and outside the U .S., we'll send you a digital copy.

[908] So we're excited, and we hope you'll join us.

[909] Yeah, we hope you will.

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[931] Okay.

[932] Back to the regularly scheduled show in progress.

[933] The other thing that they launched in 1996, maybe this is future acquired, maybe come Christmas time around Thanksgiving, we'll do this, is Oprah's favorite things.

[934] Oh my God.

[935] So I did not realize, did you know, Ben, that, remember Ugg's boots, the furry?

[936] I learned this in the research that Oprah was the queenmaker of that.

[937] Oprah made Ugs.

[938] she had someugs she loved them and then that year so by the way the way that Oprah's favorite things work I think it's the first episode of each season was the Oprah's favorite things I think they switched around when they did it sometimes they did around Thanksgiving right before Christmas shopping sometimes it was September with the first episode of the season like the car thing the car giveaway was not random like it was part of a series of things that she started where it was like when I have an idea of a thing that I love that I want to give to my audience audience like pajamas, for example, like we will, we will just give them the audience because I want them to enjoy it.

[939] And Ogg's Boots were one of those.

[940] Ugg's boots.

[941] Amazing.

[942] So we have Oprah to think.

[943] And for people to understand the impact of that, this got dubbed the Oprah effect, the combination of this and the book club.

[944] It's almost like the Steve Jobs reality distortion field.

[945] Like the Oprah effect is when Oprah sort of endorses something and then massive sales come out of that.

[946] The book club in particular.

[947] particular, she did 70 books over the 15 years of doing this, so the 15 of the 25 years of the show.

[948] In total, there were 55 million copies sold after Oprah recommended it.

[949] So, you know, averaging close to a million purchases per book that she recommends.

[950] So obviously it would spike it to the top of the New York Times bestseller.

[951] Obviously, it would make it basically the number one book that year.

[952] You know, most people read a book a year.

[953] And for a lot of people, like that was just the book that Oprah recommended every year.

[954] And so the way that a lot of sort of analysts have sort of worked it out is when Oprah decides to endorse something, that increases the number of people who will do that thing by a million.

[955] Yeah.

[956] The, uh, well, going back to the cookbook with Knapp, they, uh, I don't remember the exact numbers, but the story is they were like, yeah, we're going to print like 50 ,000 copies or something like, or 100 ,000 copies.

[957] And Oprah's like, what, we, that?

[958] that's not enough.

[959] That's crazy.

[960] And they're like, well, you know, we printed the Julia Childin Cookbook, and that's only ever sold 300 ,000 copies or something.

[961] You know, Oprah said, yeah, you're going to have to 10x your production on this.

[962] This is a good of place as any to talk about, you know, not only the Oprah effect, but really, really what did her audience look like and try and contextualize those numbers a little bit.

[963] So at this time that we're currently in the story in the early 90s, Oprah would draw 12 to 13 million concur.

[964] current viewers every single day to her 4 p .m. show.

[965] Astounding.

[966] That's like 5 % of America at that point in time.

[967] Yeah.

[968] And if you look at over the course of a week, the number of unique viewers who would tune into one of her show would be 40 to 50 million.

[969] So her audience, her weekly, effectively weekly active users or weekly audience was like 40 to 50 million people.

[970] Now there were spikes where, and we'll talk about this in a moment, but she interviewed Michael Jackson and a very famous interview the first time he had been interviewed for 14 years.

[971] She did it on site at Neverland Ranch.

[972] That actually got 90 million viewers.

[973] And at any given time during the broadcast, it was 62 million concurrent.

[974] Yeah.

[975] Which was, I believe it was, it was either the largest or maybe the top three.

[976] It's the largest interview in television history.

[977] Yeah, but I think it was the largest, it may have been the largest.

[978] It may have been the largest non -super Bowl television event in history, too.

[979] That's freaking wild.

[980] So the comparison that I want to make here, just to, like, really drive this home is, so people talk a lot about, like, the incredible amount of attention and users and watch it on views on YouTube or the incredible amount of people who watch e -sports or video games, like, let's not even take that weekly viewer number of 40 to 50 and just look at the sort of like concurrence on a single show on an average weekday at 4 p .m. So like 13 million people, the largest concurrent number on Twitch ever has been when Drake and Ninja played Fortnite.

[981] And that was 700 ,000 concurrent.

[982] So there was like this perfect moment in history where the internet wasn't a thing yet.

[983] So you didn't have the massive sort of fragmentation.

[984] of all the different creators who would rise up that you could watch.

[985] So there was a very constrained set of who the creators were.

[986] Oprah had this really magical personality and this really magical ability to relate with the audience.

[987] And the way that we were in this syndication era, so you actually could reach a national audience.

[988] It was like she shot the gap.

[989] She had the right talent and she shot the gap where there was a constrained set of creators, but you could reach a national audience and just had way more influence and way more sort of ability to gather people concurrently than on a regular basis than anyone would ever have ever again.

[990] It is.

[991] It's amazing today for influencers, media properties and everything.

[992] In many ways, it's so much better.

[993] There's so many more opportunities.

[994] There's Twitch.

[995] There's YouTube.

[996] There's TikTok.

[997] There's Twitter.

[998] There's podcast.

[999] There's everything.

[1000] There's blogs.

[1001] There's email newsletters.

[1002] Oprah only had appointment television.

[1003] But because of that, there's also such a cacophony of content out there.

[1004] Oprah had this moment where she had the stage basically all to herself.

[1005] I mean, yeah, there was Jerry Springer and there was Donahue and all the bit like, you know, okay, she had a handful of maybe competitors, many of which she ended up co -opting and, you know, we'll get into in a sec, Dr. Phil, Rachel Ray, Dr. Oz, these all become Harpo productions.

[1006] Yeah.

[1007] There's no one thing that you can attribute it to, but certainly a driving factor in what helped was the fact that what she valued over anything else was authenticity and the trust with her audience.

[1008] And so she would never do anything that she felt would violate her code or what she felt like people would want to watch on an enduring basis.

[1009] She would never wade too far into the waters of the sort of trashy TV.

[1010] Even though it could bring immediate ratings, she felt like that wasn't the thing for the 25 -year friendship that she wanted to have with.

[1011] frankly the women of America and that that ability to constantly say no there's this wonderful David Carr article in the New York Times you know rest in peace David Carr a triumph of avoiding the traps and it's really about how it's all the things that Oprah didn't do and the things she said no to and the way she stayed sort of true to herself and true to her audience that that really let her keep that for so long yeah so So in 1999, a couple things happened, 1990, 2000.

[1012] Oprah renews its time.

[1013] It's up for renegotiation renewal for Harpo and the King World deal.

[1014] They renew it for 130 million a year, or what works out to 130 million a year in the revenue sharing.

[1015] Plus now Harpo gets equity in King World.

[1016] Remember, King World got equity in Harpo originally.

[1017] Harpo gets equity in King World as part of this deal.

[1018] That year, later that year, CBS acquired.

[1019] King World for two and a half billion dollars, Oprah and Harpo make $100 million on that deal in months.

[1020] And that, I wonder if it was actually with that capital that she then started buying and bringing in other shows into the Harpo network.

[1021] So Rachel Ray, Dr. Phil, Dr. Oz, many of which she had kind of made them originally as guests on Oprah's show.

[1022] They bring and start producing those shows and owning them as part of Harpo.

[1023] And then the next big thing is it launches in 2000, they partner with Hearst and they launch O Magazine, becomes the largest most successful magazine launch in history.

[1024] 2 .5 million copy circulation right off the bat brings in 140 million in circulation plus advertising revenue in the first year.

[1025] The empire just keeps on growing.

[1026] A couple years later, she does deal with Sirius XM, getting back to the radio routes, does a three -year, $55 million contract to bring Oprah and Friends as a channel on Sirius XM.

[1027] That was the next piece of the empire.

[1028] Yeah, this is, in large part, this is harvesting.

[1029] She can't build a bigger audience unless she goes global or unless, you know, she decides that we want to start bringing more, frankly, more men into the percentage of people who are watching my show all the time.

[1030] Like, she already addresses the women and some of the men of America.

[1031] And so at this point, it's about harvesting that audience.

[1032] And what you can basically do is see her for a long time say, nope, my show is the only way that I reach people.

[1033] And then her realizing, oh, people will pay me for little pieces of all this stuff.

[1034] And I can carve off, well, Oprah and Friends is a thing, but it's only audio and it's a different type of content.

[1035] And, you know, you start to see this sort of like, what deals can I cut in what different ways across what channel to reach what segment?

[1036] of my audience.

[1037] And what different media rights can I own and monetize those?

[1038] So we cannot talk about this, too.

[1039] The other thing in the mid -2000s that she just nails is like, she just reaches the apex of her powers as the like celebrity confessional.

[1040] And we got to talk about 2005, Tom Cruise, Katie Holmes.

[1041] You seem really just overcome with love.

[1042] This is a whole new Tom.

[1043] This is a different Tom.

[1044] Oh, man. So fun to watch on YouTube.

[1045] But that's actually, again, Oprah to kind of be, I don't know how much this was intentional, but this kind of stuff that she starts doing on the show, it's perfect for the internet.

[1046] The old shows were like, it was the whole show.

[1047] It was the buildup to the wagon of fat, you know, all that kind of stuff.

[1048] But now it's like, you get these moments, get these clips.

[1049] And then they're going to be posted and reshared and reposted on the internet.

[1050] The rise of Oprah and the dominance of Oprah couldn't have, and fortunately for her, didn't happen in the internet world, but she did adapt to the internet world very well, particularly with all these different sort of media rights and her later launching Oprah .com and some more stuff we'll talk about.

[1051] But the way that she changed the content, I think, is exactly as you point out, David, just perfect for these shorter YouTube clips and hasn't gotten as short as TikTok yet, but the older episodes, it would be a whole, like her most buzzy shows would be a whole hour -long narrative arc, so the fat wagon, or when she literally moved her show to that terrible racist county where she actually relocated the whole show and did an hour -long show with an audience of mostly white supremacists who were like explaining to her why they needed to be this all -white community.

[1052] It's an hour of one single topic that's gut -wrenching.

[1053] She would later have neo -Nazis on the show.

[1054] I mean, she would have this hour -long block of television that makes you feel a certain way for an hour that was perfect for then and is not perfect for now.

[1055] And you're right.

[1056] This Tom Cruise clip, like, I mean, you can even just pick three seconds, wind it back and forth over and over again, turn it into a gif.

[1057] And like, that's the content.

[1058] And I think that you're right.

[1059] She's very adaptable.

[1060] So kind of, you know, on this going out on top, so she decides that the 25th season of the show is going to be the last and then she's going to fully transition into mogul status and she's working on a big deal, which we'll talk about in the sec. In the second of the last season of the show, I think this is best, most perfectly encapsulated with, to kick off the season premiere in the 24th season, they have the Black Eyed Peas come to Chicago, do it.

[1061] Oh, yeah.

[1062] They got to our event.

[1063] And they do, this is when flash mobs, internet flashmiles were a thing.

[1064] They do a flash mob dance.

[1065] They do a special version of I Got a Feeling with new lyrics just for Oprah.

[1066] Yeah, like, Will I am rewrote the lyrics to the song, at least the first verse.

[1067] Yep.

[1068] And they get, you know, 20, 30 ,000 people to come.

[1069] to Miracle Mile in Chicago.

[1070] They close down the streets.

[1071] They do this thing.

[1072] And then everybody does a choreographed flash dance in the middle.

[1073] And it's like the most perfect three minute YouTube thing you can ever imagine.

[1074] We'll link it in the show notes.

[1075] Oprah doesn't know.

[1076] It's incredible.

[1077] She is somehow they told 30 ,000 people something that in Chicago that Oprah didn't know.

[1078] And they actually pulled off like shocking her.

[1079] The most telling quote that she has is, you know, when they do close down the streets, The Miracle Mile and everything, she asked one of her producers, are the black eyed peas really big enough to sort of close down, you know, close down the streets of Chicago?

[1080] And her producers are like looking back and her, yeah, I think they are.

[1081] And it's just because she doesn't actually know what the real reason for closing it down.

[1082] It's, it's very cool.

[1083] Well, the irony is, yeah, the black eyed peas maybe Oprah is definitely big enough to close down the miracle mile.

[1084] So the show ends, and it's 25th season in 2010.

[1085] They do a two -part finale.

[1086] They have, you know, everybody, everybody who's anybody is part of it, Will Smith, Madonna, Michael Jordan, Tom Hanks, Tom Cruise, of course, is back.

[1087] Sons, Katie Holmes, I think, at this point.

[1088] And as part of it, Aretha Franklin, makes it back all those years after the $100 bill giving out the windows, things amazing grace in the, uh, I think it was, the last episode was just Oprah in the studio.

[1089] But, uh, the second, The second and the last was in the United Center.

[1090] Yeah.

[1091] And pretty amazing.

[1092] So that's the wrap on Oprah, the media personality.

[1093] But the deal she's working on is, so she had been an investor, Harpo had been an investor in the cable network, Oxygen Media.

[1094] That gets sold to NBC Universal in 2007.

[1095] I assume with some of the proceeds from that, she then does a deal with Discovery in 2008, the Discovery Channel, to turn the Discovery Health, channel, which was struggling, into the Oprah Winfrey network.

[1096] And the idea is it's going to be a 50 -50 JV.

[1097] Oprah's everything she had been, all the assets she'd been contributing to oxygen.

[1098] Now going to move over.

[1099] It's going to be her own channel, 50 -50 JV with Discovery.

[1100] And I believe in 2017, I think Discovery bought out half of Oprah's stakes.

[1101] So they now own about like 73, 74%.

[1102] And Harpo owns the rest.

[1103] The plan is they're going to launch in January 2011 because the King World CBS distribution rights for the Oprah Winfrey show ran through May 2011.

[1104] So they're going to launch in January and then by the second half of the year, they'll be able to be a run and reruns of the Oprah Winfrey show along with Dr. Phil and Rachel Ray and everything.

[1105] The channel actually struggles for a couple of years after they launch it.

[1106] But then, you know, again, like Oprah Harpo like they're tuned in.

[1107] Yeah.

[1108] And let's talk about the channel struggling because what that was is, again, pulling forward a playbook thing.

[1109] But we've talked a lot about this notion of a direct relationship with your audience.

[1110] Oprah may have been able to reach all those people, but she didn't actually, it's not like she'd email addresses or phone number.

[1111] for them, they watched channels that she was on.

[1112] And when she'd moved over to a new channel, like a Joe Rogan or, you know, a lot of, like, we're seeing it unfold in podcasting now, like, she isn't necessarily have an ability to reach out to all those people and say, hey, come on over.

[1113] And so the first year is very disappointing in the amount of people she can actually reach.

[1114] Because, and I think she has talked about this, she underestimated the power of habit.

[1115] They were used to turning on ABC at 4 p .m. and just kind of seeing her.

[1116] Channel 6, whatever, yep.

[1117] Yeah.

[1118] Yeah.

[1119] That's such a good point.

[1120] I hadn't thought about that.

[1121] That's such a good point.

[1122] The other problem is, yeah, they've got the Oprah reruns, but there's no new Oprah show, right?

[1123] Like, there's no reason to tune in.

[1124] But in 2012, they sign a production deal with Harper does with Tyler Perry to bring over some of his existing TV series that he's been working on and also produce some new TV series for own and And own is the Oprah Winfrey Network.

[1125] The Oprah Winfrey Network, yep, with a re - branded Discovery Health, and that, I think, kind of saves the network.

[1126] So the haves and the have -nots, Tyler Perry is the haves and the have -nots, become a huge hit along with other series that both were existing and come over and new ones are loving you as wrong, the pains for better or worse.

[1127] His empire and that kind of content starts, you know, a whole new generation of folks watching, watching own.

[1128] This is still starting to play out, but the final ultimate media mogul moment, which we're going to smile and laugh about here, is Oprah makes it on stage in an Apple keynote event, does...

[1129] Possibly the worst Apple keynote all the time.

[1130] Possibly the worst.

[1131] So, yeah, what's the deal with Apple look like?

[1132] So it's still sort of playing out.

[1133] I think it was more of an announcement vaporware than anything else in 2018.

[1134] But she entered into a, Harpo entered into a unique, quote unquote, unique multi -year content in partnership with Apple.

[1135] That would consist of the idea is they're going to bring back Oprah's book club as part of IBooks.

[1136] And isn't Oprah's book club on Oprah .com now?

[1137] She has like a smaller version of it that's continued.

[1138] Yeah, I don't know what ultimately's happened with that.

[1139] But they're also going to be Oprah interviews on Apple TV Plus.

[1140] She was going to conduct interviews.

[1141] So that has been part of it.

[1142] I don't think that partnership has played out as intended with the...

[1143] It's been two years.

[1144] or a year and a half.

[1145] Yeah.

[1146] The other thing is like that that would have to be a special carve -out because she is under exclusive on -screen, her on -screen appearance, I think, and maybe it's only for terrestrial, like, TV.

[1147] Yeah, it must be not streaming.

[1148] But yeah, she's exclusively on screen with the Oprah Winfrey Network as part of the discovery relationship.

[1149] Yeah.

[1150] These days.

[1151] Yeah.

[1152] To kind of wrap it up here in the history and facts, you know, Oprah.

[1153] Oprah achieved her goal.

[1154] So today, Forbes ranks Oprah as the sixth wealthiest black person in the world, the wealthiest black woman, and the 10th wealthiest self -made woman in the world.

[1155] And the crazy thing is we'll get into this in a sec. But I think the way Forbes values her wealth is dramatically undervaluing her.

[1156] So I suspect it's actually a lot higher than that.

[1157] So there's an interesting thing where in 2009, it was estimated that she was worth $2 .3 billion.

[1158] And it It's sort of easy to understand how she got there, where she basically had this ramp from making $35 million in 1988, all the way up to making like $200 plus million a year by 2008.

[1159] And, you know, that was just every time she got to renegotiate a deal, a little bit more in her favor, her audience continued to grow until it plateaued in the late 90s, but then she sort of got better and better terms each time all the way until the show ended.

[1160] And so we can sort of see, like, well, that's kind of easy to understand how she slash Harpo accumulated over $2 billion.

[1161] What's not as clear is, in all these deals that she's doing now, almost all of them are impossible to know the terms other than the discovery deal.

[1162] And so in the last 10 years, you don't really know.

[1163] And Forbes certainly doesn't know exactly how to estimate Harpo's enterprise value, Oprah's net worth.

[1164] So we're still sort of in this same mid -to's number that everyone's guessing at.

[1165] mid -two's, I think we saw in the methodology for Forbes.

[1166] They said they added up all the after -tax profit cash flow to Oprah that they suspect, that they estimate Oprah had gotten from Harpo over the last, you know, 20, 30 years.

[1167] Well, that doesn't make any sense.

[1168] Anybody who knows out of value businesses is you value them based on the street discounted stream of future cash flows.

[1169] So all of that to say, there are all these properties now that Harpo has their hands including a massive cable network of which they own 25%.

[1170] Also, in 2015, Weight Watchers, the company, was struggling.

[1171] Did you find this, Ben?

[1172] Yeah.

[1173] She bought, didn't Oprah buy 10 % when it was really struggling at nice terms?

[1174] Like $30 million, yep.

[1175] But then she was like, oh, I'm going to be a brand ambassador.

[1176] Yeah.

[1177] And so then in large part, due to her becoming a brand ambassador, like her leveraging herself, she like massively grew the value of that company.

[1178] massively.

[1179] It's estimated to be worth about half a billion dollars now that stake alone that she paid $30 million for or five years ago.

[1180] We don't have the time to do the investment banking style some of the parts valuation analysis on Harpo and the Oprah Empire.

[1181] But there's no way that it's only $2 .5 billion.

[1182] It's way more than that.

[1183] I mean, imagine if like, you know, let's just think back to our, I think this episode belongs in the whole broadly affiliated Disney saga because of all the ABC and Cap Cities connections here.

[1184] But when we were talking about, you know, the Marvel deal, the Lucasfilm deal, the Pixar deal, all these companies that Disney bought, if Disney were to buy Harpo, and that is not a crazy idea that Disney should buy Harpo at some point, especially as Oprah, you know, becomes older, there's no way with all the assets.

[1185] I mean, think about what they paid for.

[1186] Let's just take Lucasfilm, right?

[1187] They bought Lucasfilm, which was essentially the Star Wars franchise, the Indiana Jones franchise, and ILM for what...

[1188] And no new films.

[1189] development.

[1190] Yeah, no new films and development.

[1191] Yeah.

[1192] For three, was it like three point six that deal billion?

[1193] Something like that.

[1194] Something like that.

[1195] Now look at Harpo, right?

[1196] You've got all the library of these rights to all of these shows, right?

[1197] Like now imagine Disney Plus like how valuable is the entire library of the Oprah Winfrey.

[1198] Oh, I hadn't thought about that.

[1199] Not to mention Dr. Phil, Dr. Oz, Rachel, Ray, all this stuff.

[1200] Is it all on YouTube right now?

[1201] Like all the old Oprah shows?

[1202] I don't know.

[1203] Um, would anybody watch what's the back catalog of the Oprah Winfrey show worth?

[1204] That's a good question.

[1205] I mean like clearly the back catalog of something like friends is worth a lot these days.

[1206] Now that's a sitcom, not a talk show, but like I think a lot of people would like to watch the back catalog.

[1207] There's at least 30 or 40 episodes that must still get a lot of views.

[1208] Yeah.

[1209] And then there's all the streaming rates and, you know, YouTube rights and everything associated with that.

[1210] Uh, then you've got like stuff like, oh, the magazine and all that stuff.

[1211] Then you've got all the new content that Harpo is producing, like Tyler Perry's content out there.

[1212] Then you've got the stake in the cable network itself, which is extremely valuable.

[1213] Yeah, like this is a, this is a many billions more than two and a half billion dollar deal if Disney or somebody else comes along and buys Harpo.

[1214] Yeah, some other interesting as we tie up our sort of history and facts here, Oprah by the numbers, stats here.

[1215] over the 25 seasons they the show received over 20 million letters so like lots of different ways to gauge fandom here but like 20 million and they're not you know this is like page views not unique users but like 20 million times people were strong enough fans to write a letter in like an interesting way to think about this is like if her reach was 50 million people you sort of assume like I don't know, one or two percent of your fans could be super fans.

[1216] I think a lot more than one or two percent of her reach were super fans.

[1217] Yeah.

[1218] I mean, 20 million YouTube comments would be a lot.

[1219] Imagine like the barrier to actually like writing a letter.

[1220] Yeah.

[1221] And mailing it.

[1222] Like, yeah.

[1223] Yeah, it's crazy.

[1224] I guess the point that I want to drive home here is, yeah, she had reach.

[1225] But like, she had really intense, intense fandom at that point.

[1226] and still today.

[1227] The other place I want to take this that we didn't touch in history and facts and I just want to plan a little seed with people so Oprah based on her ability to compel people you know not through strong you know I need you to go do this but just by saying it's what she's doing if she says I'm reading this book and I think it's good and a million people go read the book or you know I'm wearing these pajamas and I think they're good and a million people go buy the pajamas well she at some point said you know, this person Barack Obama is truly inspiring to me. There are many research analysts who say that he got a million votes in a very tight election that can be credited to Oprah.

[1228] And there's a whole story that we don't have time to go into around Oprah, you know, not wanting to be political and not wanting to have either candidate on the show from the 2008 election.

[1229] But, you know, her early friendship long before he was running for president with Barack Obama but definitely led to a lot of people feeling strongly about him that otherwise wouldn't have.

[1230] Well, that is a whole other podcast worth of content for another show as a must do.

[1231] But just as an example, that a small one, Oprah had never had political guests on her show before the 2000 election.

[1232] And then she had both Gore.

[1233] In which case, she gave equal air time.

[1234] One episode did, Bush and Gore.

[1235] One episode to Bush and Gore.

[1236] Before those episodes, Gore was leading Bush by 10 points in the polls.

[1237] and they came on Gore did like fine was kind of stiff bush comes on and he like gives Oprah a big kiss he gives prelines to like the whole audience like he he crushed it like he did great 11 point swing bush goes from 10 points behind in the national polls to one point ahead just on the back of the Oprah appearance pretty amazing yeah all right let's move into analysis as yeah as we analyze here the the crux of the whole thing that we are going to Because obviously, like, this isn't a classic acquired episode where Facebook buys Instagram and we value if that was a good use of capital.

[1238] The transaction that we're going to analyze here is Oprah spending the $16 million of her own money to buy out the rights to produce her own show and own everything outright.

[1239] Of course, with the 10 % for King World and the 10 % for Jeffrey Jacobs and what that ultimately turned into.

[1240] And obviously we're going to be pretty favorable here, but that's how we're going to sort of think about dimensionalizing what we're analyzing.

[1241] So we talked about kind of rather than doing narratives or acquisition category, since there's no acquisition, but what like category is actually a good one, and maybe specifically a tweak on category in honor of our book club and Hamilton Helmer and Seven Powers is, well, let's talk about what's the power for Oprah and Harpo?

[1242] Like, what's the defensibility, maybe especially in this new influencer world that we live in where she's not the only influencer out there?

[1243] the question is would harpo have the majority of its future economics if not for the relationship between tens of millions of americans and opra that comes from the past like i'm tempted to say that the biggest value driver for harpo is continuing to monetize a relationship between opra the human and a third of america or a quarter of america we can talk about sort of what power that fits into, but you have these other properties that aren't Oprah specific, like Dr. Oz and Dr. Phil and Rachel Ray.

[1244] But there's still Oprah brand kind of.

[1245] Right.

[1246] I think the main value driver here is people trusting Oprah and wanting to continue that relationship.

[1247] Here's an interesting question.

[1248] Is that relationship with Oprah?

[1249] Because I totally agree with you that trust, that relationship with the concept of Oprah.

[1250] that so many not just Americans, but people all around the world have now, does Oprah need to be alive for that to be the case?

[1251] Like, clearly Walt Disney doesn't need to be alive for, you know, for me to want to fly to Disneyland several times a year.

[1252] Right.

[1253] Now, of course, that's different.

[1254] Like, Mickey Mouse doesn't die, you know, like that can, so it's a, it's different.

[1255] It will be interesting, you know, hopefully Oprah will be with us for many, many, many years to come.

[1256] Well, let's, let's, let's take mortality out of the equation.

[1257] And let's just say whether she's in the equation or not.

[1258] So like could she sell Harpo for $5 to $10 billion?

[1259] And you don't have the rights to me anymore.

[1260] I'm just going to be on promised land my ranch.

[1261] By the way, promise land, I can't resist.

[1262] In Montecito is one of if not the probably like top five or ten highest valued real estate properties in the world.

[1263] It has a five mile long driveway.

[1264] it's yeah amazing you know who else has a place in Montecito is Jeff Jacobs I think he is like a $16 million more modest estate um nearby more modest to see I mean yeah understatement of the century so on that though I think what's interesting and with what Harpo and Oprah and with own and this the the discovery deal have done in the last since ending the show is I actually think it's a lot more viable that the value of Harpo continues without Oprah being actively involved now, then that would have been 10 years ago because let's just look at Own the network.

[1265] You know, it's not really just Oprah's properties that are driving that anymore.

[1266] It's Tyler Perry's properties that are driving it.

[1267] Well, I guess that's probably the biggest one.

[1268] I was going to say, oh, the magazine, and there's more in that.

[1269] I haven't spent enough time with Oh, the magazine, to know how much of it is Oprah these days versus other stuff.

[1270] Unlike the Oprah Winfrey Show where you did.

[1271] Yeah, it has good circulation for a magazine, but it's, you know, de minimis relative to, like, modern internet properties.

[1272] So I guess what I'm going to say here is, if I was to apply a Hamilton Helmer Power, I guess it would be a cornered resource where Oprah is the cornered resource.

[1273] And we'll get to this in grading, but like Harpo is worth a crap ton with Oprah and I think a lot, lot, lot less without her.

[1274] Yeah.

[1275] I think that's probably true.

[1276] Interestingly, though, I was also going to say cornered resource.

[1277] I think back pre this era, in the older era of the Oprah went for sure.

[1278] show and the early days of Harpo, it was two cornered resources.

[1279] It was Oprah, but it was also the syndicated distribution deals that were a cornered resource.

[1280] Because it's not like, there could have been another Oprah out there.

[1281] There probably were other people who were just as talented as Oprah.

[1282] But unlike today, where anybody can, you know, turn their selfie camera on, back then, it was such a barrier to entry to have those distribution deals in place that nobody could be with it.

[1283] Yeah.

[1284] And you bring up this other concept too, David, of like, And this exists within influencers today.

[1285] There's a network effect within audience.

[1286] So there really is a critical mass thing that happens where if you could watch Oprah that was doing all the exact same things that Oprah was doing, or you could watch someone identical to Oprah that no one's ever heard of and your friends weren't talking about and other people wouldn't be reading those books and other people wouldn't be buying those products, but still had the same charisma, amazing guess.

[1287] You just would never watch that one because you want to be a part of the cultural zeitgeist that Oprah is creating.

[1288] In some ways, it's an audience network effect.

[1289] The obvious modern day analogy to all this is the Kardashian Empire, right?

[1290] With the Kardashian West Empire now combined.

[1291] And actually, also this kind of federation.

[1292] The way influencers work today is it's not just one person.

[1293] It's this like, it's a crew, right?

[1294] So you got Kim, you got Kanye, you got Kylie, you know, like Kylie's got her cosmetics brand.

[1295] And Kim's now doing a podcast with Spotify.

[1296] All right.

[1297] Well, we'll talk more about this in Playbook.

[1298] and to come.

[1299] But, yeah, I think there's really something to this audience network, but it's now like a federated network across influencers.

[1300] That's true, yeah.

[1301] Yeah, you have to imagine there's audience overlap between Dr. Phil, Dr. Oz, Rachel Ray, like in the different jobs to be done in a shared audience by each of those creators in the same way that, yeah, there's like influencer cadres that each serve a different job to be done for a same person in the audience and if you can successfully build that which you know you gotta think Oprah is on our way to but if you can successfully build that then that's how Oprah can sort of make her exit from it and it retained value on its own okay let's go to what would have happened otherwise so like what if Oprah didn't spend 16 million and kept working for WLS I mean first of all she just she might have stayed as important in the cultural zeitgeist, but I think it's telling, this is also in the podcast you reference at the top of the show, that Oprah felt like she was doing wrong by other people at the station by being so successful.

[1302] So when she would see people in the elevator and all their shows were fine, but not nationally syndicated, and she was queen of television, it created cultural problems at the station.

[1303] So, like, she talks about how she felt that she needed to bring the Oprah show into its own physical space just to detangle from, you know, all the existing incentives that existed for everyone else in the building.

[1304] The easy thing to say is, you know, she never would have become the mogul with the power that she has today.

[1305] And that's really what she wanted.

[1306] So she probably wouldn't have felt that she was doing right by herself.

[1307] But it's also hard to guess what the unintended side effects were of staying in that station.

[1308] I have to imagine that if we were to ask Oprah this question it would be like everything is so much better in magnitude like I can't imagine she regrets that decision one iota but i think a lot of that though is just like her own like you're saying her own ambition like the alternative universe is she looks like what most movie stars look like is talent you know yeah maybe they have their own production quote unquote production studios but they're not really like doing that they get an executive producer credit yeah right exactly Exactly.

[1309] That's just like for getting some extra points on on the deal.

[1310] Really, they're just talent and not entrepreneurs.

[1311] Oprah have decided to become an entrepreneur.

[1312] Yep.

[1313] That's a great.

[1314] It's a great way to put it.

[1315] Okay.

[1316] Playbook.

[1317] So for folks who are new to the show in this section, we basically say, look, if someone wanted to do something like this, what's the playbook that they should run?

[1318] Not to say anybody could duplicate literally anything that we cover on this show.

[1319] But like, what are the themes that we noticed that led to their ability to pull this off?

[1320] And David, the first one that obviously comes to mind that we've mentioned three times now in the show is she really was the first influencer, invented a lot of these strategies.

[1321] And there's a big one that we didn't touch on yet that I was shocked in when I did the research.

[1322] And I shouldn't have been shocked, but I was.

[1323] And that is the car giveaway where she gave away how many of these things, 276 cars, totaling $8 million.

[1324] And they were Pontiac G6s.

[1325] I don't know in my head they were now that's not what they were but that is what she gave away I thought this whole like Oprah's giveaway thing is she's so rich she doesn't need to be rich she doesn't care about being rich she loves her audience so she buys some things that's not at all what happened this eight million dollars that Pontiac yeah Pontiac spent all the money and they were like this is well worth it for our advertising are you kidding me how many It took a, it took us some effort to get them up from 25 cars all the way up to the 276 by their producers.

[1326] But like, this was Oprah being like, wait a minute, I can give stuff away that other people pay for.

[1327] And I think like that is a thing that you see across the whole YouTube ecosystem now of sort of sponsored products.

[1328] And, uh, Marquez just did, um, a sponsored video with Buick, right?

[1329] Like, where he didn't give the Buick away, but like he did an unboxing of a Buick.

[1330] And, like, yeah, that's the legacy of Oprah right there.

[1331] Right.

[1332] So I just wanted listeners to know that Oprah didn't actually buy all those Pontiacs that Pontiac did it.

[1333] And, you know, I have to imagine that was a, like, you can buy one Super Bowl ad slot for a million bucks or you can buy eight and have us all still talking about you get a car, you get a car, you get a car.

[1334] So a legendary ad deal is the way to think about that.

[1335] And at the end of the day, all those audience members got the cars, you know, like they still because it was a gift they'd pay taxes on.

[1336] It's complicated.

[1337] But so they could get the net cash or they could get the car and pay the taxes.

[1338] Anyway, that's neither here nor there.

[1339] Okay, for Playbook, though, so I think I want to, let's spend a sec and talk about, okay, super clear analogy as we've talked about all along between Oprah being the first influencer now into modern influencers.

[1340] Like we just mentioned Marquez and MKBHD and all these YouTubers and then you've got the Kardashian West Empire out there.

[1341] You've got George Clooney and Casamigos with his tequila brand.

[1342] Let's talk about what are the things that are different now.

[1343] It's different in that you don't need the distribution deals.

[1344] There's no barrier to entry.

[1345] You can just throw up a podcast feed.

[1346] You can throw up a YouTube video.

[1347] You can jump on TikTok.

[1348] You don't have to cut the deals, but you do still need to spend something to get distribution.

[1349] And it might be spending on honing the content.

[1350] But you do have to, I mean, everybody, even though your stuff's freely available, you have to figure out a way to make it occur to people that they should watch.

[1351] That's what I was getting to is like you can, the gatekeepers are gone, but long live, the gatekeepers, right?

[1352] And the gatekeeper being like, you got to rise above the noise and create something compelling that's going to get people's attention and be worth watching amongst the sea of all the content out there.

[1353] Yeah.

[1354] The gatekeeper is a lack of scarcity.

[1355] Like, now that there are no gatekeepers, there's millions of people, hundreds of millions of people creating content.

[1356] The interesting thing to observe here is for the influencers who do rise above the fray, you see them cutting traditional distribution deals because they say, gosh, I have lots of money.

[1357] Can I just pay you to distribute my content?

[1358] And so that when you sort of see the influencers emerging from YouTube and going on to more classic mediums, the ability to sort of buy in bulk and have predictable economics is still beneficial.

[1359] Yeah.

[1360] Okay, two quick things I want to say.

[1361] One is what you talked about with the cars, I just want to label that as a playbook theme, which is for this type of business, for an influencer business, like monetizing your product recommendations and like kind of native advertise.

[1362] Like this is the first native advertising that happened.

[1363] And like that is a great business model for this type of business.

[1364] The other thing about how this is all evolved with the internet is, you know, Ben Thompson's written about this ad nauseum.

[1365] so we won't belabor the point, but is, like, Oprah worked, and Oprah could be the best.

[1366] Like, she was mainstream.

[1367] She appealed to certainly just about every woman in America, but lots of men to, like, like massive, big, wide lanes.

[1368] Now, you don't have to do that with the internet.

[1369] You can aggregate a niche audience.

[1370] So, like, you can have influencers in business technology like them, like us, you know, like you can have influencers in, uh, you know, I was really hoping to get a through this whole thing without you ever labeling us an influencer.

[1371] Okay.

[1372] We got it to stop talking about it.

[1373] No, but you're right.

[1374] Like, if you think about the ways that influencers monetize, yeah, there's the sort of like native advertising paid placement type of thing.

[1375] There's the notion that you're going to create really intense fandom within a niche, which she just had a freaking huge niche.

[1376] And there weren't a lot of other people competing.

[1377] So like the niche was women.

[1378] Yeah.

[1379] And so, you know, she's able then to carve that audience up as more channels emerge into more niche down versions and then monetize them each in a different way through the magazine, through the website, through YouTube views, through whatever else.

[1380] Yeah, those are good, good themes.

[1381] Nobody was ever going to make a nationally syndicated television show about, like, the business of technology in 1986.

[1382] Like, but now the internet.

[1383] The way that I labeled this theme is she had the perfect timing where you could reach a national audience, but everyone couldn't reach a national audience, and this could never happen again.

[1384] Like, you can never reach an audience this wide, rise up this quickly, and have the intense type of fandom that she had ever again.

[1385] Yeah.

[1386] All right.

[1387] The other one that I just really want to call out is the benefits of a zero marginal cost.

[1388] business.

[1389] So from a Forbes profile that is linked in our show notes, we have the 1994 economics of the Oprah Winfrey show where, let's see, the show grossed $196 million.

[1390] Harpo was paid $100 million of that.

[1391] So we sort of know what the rev share looked like with King World.

[1392] Oprah made $74 million of that hundred personally.

[1393] So already by 94, she was making $74 million a year.

[1394] Let's pop back up to that gross revenue number, $196 million.

[1395] Show only costs $30 million to produce.

[1396] Wow.

[1397] That's some good EBITDA margins right there.

[1398] So what is that?

[1399] It's a 85 %, is that right?

[1400] 85 % EBITDA margin?

[1401] I guess it depends what you say production costs are, if that's a gross margin or if that's a net margin.

[1402] But in either case, an 85 % margin is amazing.

[1403] And The takeaway here is if you run a business where your costs are fixed to the type of content or software or whatever you create, and then your audience scales completely independent of that.

[1404] So for every additional person she added that watched the show, she got, you know, one person's worth of revenue, but it didn't cost an additional dollar to get that person.

[1405] Like, holy crap, that's a good business.

[1406] And so it's interesting that they were able to produce something.

[1407] with four people that then scaled up to, you know, hundreds of people to produce it.

[1408] But still, their audience was so big that it massively outran, the revenue massively outran the costs of the show.

[1409] This was the whole thesis of technology and software and venture capital up until people started realizing that, oh, you can also build tech -enabled businesses with lower gross margins in the real world, which, of course, you can.

[1410] But it's a very different business than the, you know, this is why the media and technology businesses are so linked is they are zero marginal cost businesses.

[1411] And when they scale, they just create beautiful, beautiful businesses and economics.

[1412] Yeah.

[1413] Also, let me revisit that and say, I think this is a gross margin because at the very least that Oprah has to pay herself out.

[1414] And that's going to eat into the EBITDA margin.

[1415] Got to pay the mortgage on the promise land.

[1416] That's right.

[1417] So the amazing economics of a media business, if done correctly, where you have sort of much like a software business, a pure software business, capped fixed costs and potentially unlimited, or zero marginal cost created unlimited upside.

[1418] Heck, Tom Murphy and Dan Burke at Capital Cities were among the first to realize this.

[1419] Indeed.

[1420] Well, I think a good time to move into value creation and value capture.

[1421] So Oprah created a ton of value in the world, managed to capture a lot of it.

[1422] Let's talk about if what she did was good for the world.

[1423] And this is something we started doing after our Uber Lyft episodes.

[1424] Oprah, I think pretty undeniably is good for the world.

[1425] Like it's hard to find an area where you're like, gosh, Oprah, making all this money, it was actually bad for the world that she was in business.

[1426] The interesting question that I'm sort of noodling on is, you know, she's got billions of dollars now.

[1427] And a lot of it's tied up in Harpo.

[1428] It's not like she has kids.

[1429] So what's she going to do with all that money?

[1430] She's donated a lot to charity.

[1431] She probably will continue to donate hundreds of millions, if not billions, more.

[1432] But it's actually an interesting question to say, well, what will be Oprah's legacy?

[1433] Yeah.

[1434] Well, it actually ties into, I hadn't thought about this until 15 minutes ago in the show, but it's directly tied into what happens to Harpo in the future.

[1435] At some point, there needs to be a home for Harpo, especially because of this.

[1436] Like, there's, Oprah doesn't have any biological errors right now.

[1437] or she could designate other heirs.

[1438] But that's 80 % of Harpo, the ownership.

[1439] Like, it needs to go somewhere.

[1440] So, like, Disney needs to buy it.

[1441] Like, somebody needs to buy it or steward it or something.

[1442] So I think this actually points to, at some point in time in the next, you know, years to decades, I think we're going to see a Lucas film Marvel -type deal for Harpo.

[1443] For sure, whether with Disney or somebody else.

[1444] we almost have to.

[1445] Still doesn't answer the question, though, of like, what does Oprah do with all the money?

[1446] So we know she has not signed the giving pledge, I believe, but she did attend the first giving pledge dinner.

[1447] Yeah, she's involved.

[1448] A lot of money over the past years.

[1449] And it's interesting because, like, we don't take this angle with other companies.

[1450] Like, when we did our Amazon episode, we didn't end on, what will Jeff Bezos do with those money?

[1451] But, like, no other company is so intrinsically tied to a person that we've ever covered.

[1452] Like that it's hard to distinguish.

[1453] Like Amazon, you know, Amazon's public company, it is 80 % not owned by Jeff Bezos.

[1454] Right.

[1455] Our sponsor for this episode is a brand new one for us.

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[1458] Yeah.

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[1484] And when you do, just tell them that you heard about them from Ben and David here on Acquired.

[1485] All right, well, let's move on to grading.

[1486] So for, again, folks who are newer to the show, we basically grade how good of a use of capital was it for Big Co to buy a Little Co and compared to everything else they could have done with it.

[1487] In this one, we're grading, how good of a use of $16 million was it for Oprah to buy out the rights to a show?

[1488] Like, I don't know if it's an A or A plus.

[1489] What's the, like, on an absolute dollar return, it can't possibly be an A plus, but on a multiple perspective, it might be up there.

[1490] It's clearly either an A or A plus.

[1491] We can't decide which until a transaction like we just talked about happened.

[1492] And then once that happens, then we can say like, okay, $16 million back in 1988, I think it was, right?

[1493] what's the IRR on that from that point in time to the 80 % of the value that Oprah realizes from the sale of Harpo if and when that should happen?

[1494] Yep.

[1495] But the bottom line is, it's incredibly hard to find a better use of $16 million than she did in 1986.

[1496] I mean, she created a compounding machine with Harpo.

[1497] I mean, that is what you're trying to do when you're creating business as a cash flow compounding machine.

[1498] And she's done that and it, you know, Got her, uh, got her, uh, got her to the promise land.

[1499] Literally got her to the promise land.

[1500] For sure.

[1501] All right.

[1502] Carvouts.

[1503] Carvouts.

[1504] So mine, uh, I have been reading this, perhaps we've been in just like 80s, 90s moments here.

[1505] Like this is, this is so great.

[1506] I'm loving it.

[1507] I've been reading the Dark Tower series by Stephen King, which I always thought of Stephen King as like 90s horror author.

[1508] Dark Tower series, it's, it's like, it's amazing.

[1509] It's basically, intentionally, but, unintentionally, you know, this is his attempt at like an American Lord of the Rings.

[1510] It like kind of fits the bill.

[1511] Like, it's excellent.

[1512] I'm, uh, I'm about two thirds of the way through it.

[1513] It's like probably eight, nine thousand pages in total, but just like so, so good.

[1514] It's about Roland the Gunslinger and, uh, many, many other characters along the way, but highly recommend.

[1515] Nice.

[1516] Well, Stephen King's also a great follow on Twitter.

[1517] He's got some, some fire takes.

[1518] Uh, mine's quick.

[1519] it's only going to be quick because if I say too much, it would spoil it.

[1520] For people who listen to Reply All, I'm going back and listening to some of the most popular episodes that I've never heard.

[1521] If you haven't listened to Reply All and you like this show, I bet you'd really like that show.

[1522] Episodes 102 and 103, Long Distance, Parts 1 and 2, starts with the host getting a phone call from a 1 -800 number that he thinks is trying to scam him, and he picks it up and rolls with it.

[1523] and it goes to like an unbelievable place that you would never guess over the course of the two episodes and it is totally thrilling.

[1524] So for those who have listened to it, I'm sure you're nodding along right now and enjoyed it.

[1525] And for those who haven't, go check it out.

[1526] Can't wait.

[1527] Awesome.

[1528] Well, we are landing the plane.

[1529] We are bringing home audience.

[1530] We hope that you live your best life.

[1531] If you have some time, I think five to ten minutes, we would deeply appreciate you filling out the acquired survey.

[1532] We do this about once a year to get a sense of how we should make the show better and really what you like about it, what you don't, what we can change and who you are.

[1533] And if you aren't subscribed and you like the show, we really think you should hit the subscribe button in your podcast player.

[1534] Or you can go to our website at Acquired .fm and sign up to receive new episodes via email.

[1535] You can also join the Slack or listen to any other episodes on there.

[1536] So without any further ado, we'll see you next time.

[1537] See you next time.